My Student Loan Refinance (Part 3)

I don’t know what information is pertinent or not pertinent to anyone who follows my blog so I will try to be as complete and succinct as possible here. I will refer (link) back to this post when I make reference to my refinance in the future.

Amount refinanced: $89,064.00
Rate: 3.500%
Minimum Payment: $636.76
Loan term: 15-year fixed (180 months)
Lender: Pentagon Federal Credit Union (PenFed)
FICO (at time of application): 794*
Loans included in refinance (amounts as of 11/1/2021):

AccountDebtDebt (7/1/19)Min. PaymentInterest Rate
Private Student Loan 2-$6,595.87-$8,271.15$93.305.090%
Federal Student Loan 1-$21,440.37-$20,583.34$0.006.800%
Federal Student Loan 2-$13,946.84-$13,457.55$0.005.310%
Federal Student Loan 3-$11,184.47-$10,737.40$0.006.800%
Federal Student Loan 4-$7,748.09-$7,518.58$0.004.450%
Federal Student Loan 5-$5,561.12-$5,520.10$0.004.450%
Federal Student Loan 6-$3,147.30-$2,849.21$0.005.600%
Federal Student Loan 7-$2,863.10-$2,649.80$0.004.660%
Federal Student Loan 8-$2,457.12-$2,538.91$0.006.800%
Federal Student Loan 9-$2,307.18-$2,047.30$0.006.800%
Federal Student Loan 10-$2,003.02-$1,813.31$0.005.600%
Federal Student Loan 11-$1,639.01-$1,573.49$0.006.800%
Federal Student Loan 12-$1,144.25-$1,035.88$0.005.600%
University Student Loan 1-$3,428.11-$4,581.00$60.418.000%
University Student Loan 2-$3,090.59-$3,629.38$0.000.000%
University Student Loan 3-$317.64-$1,031.21$30.008.000%
University Student Loan 4-$124.59-$857.81$30.008.000%
Total-$88,998.67-$90,695.42$213.71

Only a couple of things to note… First, there is a small discrepancy between the loan amount and the loan balances. This is pretty common and any overpayment will be credited to me by PenFed or refunded to me by the servicer/lender in the form of a check. And second, PSL4 was not included in my refinance which is why it does not appear on the chart above. The amount remaining on PSL4 is so small at this point that it makes far more sense for me to pay it off with the current servicer AES. It will appear separately from my refinanced loan on my student loan balances update for December 1st.

And that is it.

Fun holiday story: My father has login credentials for the private student loans that were serviced by AES. When he first logged into the account two-and-a-half years ago (the start of this blog) the balance was $30,000.00+. I didn’t realize he still checked the account until he mentioned during the Thanksgiving holiday that he saw the balance was now only $6,500.00 (he must have checked it in mid-October). I whipped out my phone and opened the app to show him that the balance was now much lower than that. He seemed very proud of me. That felt good. Not good enough to tell him about all of it but…maybe one day.

*I was…er…less than pleased with how I timed my application for this loan. I had recently applied for a Costco credit card and had taken a “new credit inquiry” FICO score ding. At the time I applied for the credit card, my FICO score was 812. Had I known I was going to be applying for the refinance, I would have waited to apply for the credit card. PenFed’s lowest advertised interest rate for refinanced student loans is 2.89% fixed (they do not offer a discount for automatic payments). While 3.500% is a much, much better rate than I had previously, I wondered if I would have gotten an even lower rate had a timed my application a bit better…

9 thoughts on “My Student Loan Refinance (Part 3)

  1. I’m happy for you that your loans are going to be so much simpler now! And I’m happy for your father that he can be proud of you for having repaid a big chunk of your private student loans. And as you said, maybe someday he’ll know about all of it, in which case I think he’ll be even more proud. 🙂

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  2. I love this story about your dad. I’m sure he was really proud of you before this paydown…and I’m sure he’s really proud of you for doing it. Good parents are a treasure.

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    • “Good parents are a treasure.” The only unfortunate thing is you don’t realize it until you get a bit older and realize that not everyone is fortunate enough to have good parents.

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  3. Oh, and on the loan — I’m not sure anyone ever gets the very very lowest possible rate. And also, I was just told by a banker in the course of applying for a HELOC that loan applications only drive your score down a couple of points. It’s really not very significant. The most important stuff by far is not missing payments, and not using much of your available credit. (My own score has been on a rollercoaster this year so I can bear that out. It plummeted 70 points when I started carrying a substantial balance on a no interest credit card, stayed in the low 700s all year, and then rocketed straight back up when I paid off that credit card and suddenly wasn’t using much of my available credit.)

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    • So…yes and no. You are absolutely right, almost no one gets the very, very lowest possible rate. However, how much a new credit inquiry dings your FICO score really depends on a couple of different variables: 1) the average age of your credit history (the younger you are or the more recently you developed a credit history, the more of an impact it has), 2) the distance between previous credit seeking inquiries (the further apart your credit inquiries are, the better as it doesn’t appear as though you are quickly trying to amass credit), and 3) the type of credit inquiry (secured credit or credit that is take out against something of value such as a HELOC or an auto loan has a lower impact than unsecured credit such as a credit card).

      Balance utilization (as you mention above) is a more significant factor in FICO scoring. FICO scores are the highest when less than 5% of your credit is being utilized AND no one particular credit line has a utilization higher than 10%.

      While I didn’t mention it above, at the same time I opened a new credit card (which lowers the average age of my credit history), I had also recently closed another credit card (which also lowered the average age of my credit history). While it took me a really long time to get my student loans together, being a senior in 2008 forced me to learn a lot about credit scores. For anyone else reading this, I would highly recommend “creditboards” which is a forum you can find in a Google search if you want to learn more about credit. It is an invaluable resource.

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