My student loan interest rate…drops?

A little over a year ago, I was thrilled to refinance my student loans at 3.5% fixed with PenFed. Thrilled. The interest and payment abatement on student loans, instituted at the start of the COVID-19 pandemic, was supposed to come to an end early in the new year, and I was excited to complete my refinance while interest rates were still low. PenFed was a great lender and the application process was fairly simple.

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My refinance fevor was slightly dampened after the Biden Administration extended the interest and payment abatement on student loans several more times. Had I declined to refinance my student loans, I would have saved a little more than $200.00 in interest each month. A year later, interest and payments still abated, and I would have now saved more than $2,400.00.

While I am thrilled that our society is having meaningful conversations about student loan debt relief, I have been feeling a bit bad for myself and what would appear to be my mistimed student loan refinance. At least I was until I received this email from PenFed earlier this afternoon…

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It’s rare that good news follows “Important information regarding your student loan” and momentary panic set in when I read the email subject line. PenFed had been great up to this point and I was dreading whatever change was going to accompany this correspondence. However, after reading and rereading the email several times, I finally realized that this was likely the best news I had received about my student loans…ever. While the refund for the finance change overpayment is appreciated, on principle, the reduction of my interest rate “…by 0.999315% for the remainder of the loan” is a much bigger deal. A rough estimate suggests that if I only made minimum payments on my student loan for the remainder of the term, the reduction in interest rate alone would shave off seven months of payments and interest.

Now, I have not taken leave of my senses and I have every intention of returning to aggressive student loan repayment in the near future once I have stabilized my finances.

Has this ever happened to anyone else? Honestly, I don’t entirely understand why they responded in this wonderful way given that I have had my loan with them for a little over a year. Excellent customer service? Am I missing something?

UPDATE: So after Avery and my exchange in the comments, I just KNEW it was phishing. So I called PenFed at 9:10PM ET this evening, and after confirming my identity, I rambled a bit about how I thought I might have received a phishing email. The woman interrupted me mid-ramble to say, “Yes…” and I immediately took that to be confirmation that it was phishing and began to ramble some more. She then interrupted me and said, “Could you please confirm your address?” I did. She then said, “Yea, you hadn’t confirmed your address in a while so I needed you to do that. But otherwise, that was a perfectly legitimate email. Is there anything else I can help you with?” I thanked her profusely and then slinked off, 1% less indebted.

2 thoughts on “My student loan interest rate…drops?

  1. Wow… am I reading that right? That’s basically a 1% drop in your rate?? Their explanation seems to point to some kind of leap year recalculation? I’m still not understanding how a one day difference in leap year could make such a big difference. I think that part is a reference to the $2.09 credit so the rate drop is still a mystery! Well, that wonderful and you deserve it!


    • Right?!? I thought maybe it was phishing (they directed me to “log in” using a link in the email… suspicious?) so I promptly DID NOT do that and instead logged into my account through another browser tab. I then found it suspicious that a copy of that communication was not in my “inbox.”

      Based on the fact that you also think it’s a bit odd (doesn’t make sense), I’m going to call them…

      If it turns out it was phishing, then whoops for them. University B is so vigilant in their test emails of us that I never open website links embedded in emails. Dos whoops for the fact that I only have my auto and education loan with PenFed and no bank accounts (other than the $5.00 “share” required to be a member of the credit union).


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