Making a bet that workers, parents, and married couples will make good on their student loan debt, PenFed Credit Union rolled out a new student loan refinancing program targeted directly at this group.
Offering consolidation and student loan refinance rates as low as 3.5%, the nation’s second largest credit union is aiming to make a mark in this growing segment of the lending market. Many student loan borrowers have multiple loans with varying interest rates. By consolidating those loans with PenFed, borrowers are promised savings of thousands of dollars that can be better used elsewhere.
With the nation collectively owing more than $1.3 trillion in student loan debt, tons of cash strapped borrowers are having a tough time paying their loans. The debt is preventing them from buying a home, starting a family and becoming an entrepreneur. If the student loan payments were reduced, PenFed says the savings can go toward one of those other objectives. The program is open to borrowers with established careers, parents who used loans to put their kids through college, and married couples who want to consolidate their student loans. “By consolidating this debt into a single, lower fixed rate, qualified borrowers could save thousands of dollars in interest charges,” said PenFed President and CEO, James Schenck, in a recent release announcing the new loan program.
Given that millennials owe the lion’s share of student loan debt, PenFed wanted to make the process as quick and painless as possible. Borrowers first use an online tool to estimate the interest rate on the loan after they were approved; the credit union would then give them rates on loans with maturities of five, eight, twelve, and fifteen years. The application process takes less than fifteen minutes and would-be borrowers usually get an answer within a few minutes.
PenFed’s student loans don’t have application fees, closing costs, or early repayment penalties, but because PenFed is a credit union, borrowers have to be members. In order to be eligible they have to be part of a certain group. U.S. military or Uniformed Services employees and their families are eligible along with U.S. government workers and their family. PenFed says there’s dozens of organizations that give people eligibility to join the credit union including the National Military Family Organization and Voices for America’s Troops.
Author: Dave Rathmanner
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