Student Loan Refinance Calculator
Refinancing swaps your loans for a new one at a new rate. The saving is easy to calculate. What you give up is not on the statement, and on federal loans it is the more important half of the decision.
Interest saved
$3,856.58over the loan
- Payment now
- $460.32
- Payment after
- $428.18
- Monthly difference
- $32.14
- Interest now
- $15,238.56
- Interest after
- $11,381.98
- Term now
- 10 years
- Term after
- 10 years
- Refinancing federal loans into a private one gives up income-driven repayment, deferment, forbearance and any forgiveness you might qualify for. Those protections have no price on this page and are not recoverable once traded away.
- The case for refinancing is strongest on private loans, where there is nothing to give up, and on a secure income where the protections are unlikely to be needed.
About student loan refinancing
The arithmetic is straightforward. On $40,000 at 6.8% over ten years the payment is $460.32 and the interest is $15,239. Refinance to 5.2% over the same ten years and the payment falls to $428.18 with $11,382 of interest — $3,857 saved for the same term.
Keeping the term the same is the important part. Refinancing to a longer term lowers the payment further, and much of that reduction is the debt being spread rather than a better rate. Set both terms equal here and the difference you see is what the rate alone is worth; then lengthen it separately if you want the lower payment and know what it costs.
The part with no number on it is what refinancing federal loans into a private one gives up: income-driven repayment, deferment and forbearance if you lose your job, discharge provisions, and any forgiveness you might qualify for. Those are insurance, and refinancing sells the insurance for a lower rate. Once sold it cannot be bought back — you cannot refinance a private loan into a federal one.
Which is why the case is strongest on private loans, where there is nothing to give up, and on a secure income where the protections are least likely to be needed. It is weakest for someone working towards forgiveness, whose loans may cost them far less than the balance suggests.
What it works out
- Both payments and both interest totals
- What the rate alone is worth, at the same term
- What a longer term does to the comparison
- Any current and proposed rate
The formula
Interest saved = Interest at the old rate and term − Interest at the new rate and term
Two ordinary amortization calculations, subtracted. There is no fee to recover in most student refinancing, which makes it simpler than a mortgage refinance — there is no break-even, you are ahead from the first payment.
$40,000 at 6.8% over ten years costs $15,239 in interest. The same balance at 5.2% over ten years costs $11,382. The saving is $3,857, and the payment falls by $32.14 a month.
Extending the term changes the character of the answer completely. The same 5.2% over fifteen years drops the payment much further, and the total interest goes up rather than down — you would be paying less each month and more overall. Both are legitimate goals; they are just not the same goal, and a quote that mixes them makes the rate look better than it is.
None of which touches the real question on federal debt, because that one has no number attached.
- Balance
- What is outstanding across the loans being refinanced.
- Current rate
- A weighted average if you have several at different rates.
- New rate
- What you have been offered, not an advertised headline.
- Term
- Match the remaining term to see what the rate alone is worth.
A worked example
$40,000 at 6.8% with ten years left, refinanced to 5.2% over ten years.
That works out to $3,856.58 over the loan.
- Payment now
- $460.32
- Payment after
- $428.18
- Monthly difference
- $32.14
- Interest now
- $15,238.56
- Interest after
- $11,381.98
- Term now
- 10 years
- Term after
- 10 years
Questions
Is refinancing student loans worth it?
On private loans, usually, if the rate is genuinely lower — there is normally no fee, so you are ahead immediately. On federal loans it means giving up income-driven repayment, deferment and any forgiveness, which is a decision about risk rather than arithmetic.
How much does refinancing save?
On $40,000 going from 6.8% to 5.2% over the same ten years, $3,857 of interest and $32 a month. The saving scales with the balance and with the size of the rate cut.
What do I lose by refinancing federal loans?
Income-driven repayment, deferment and forbearance, discharge provisions, and eligibility for forgiveness programmes. A private lender offers none of those, and the swap is permanent — you cannot refinance back.
Should I extend the term to lower the payment?
It is a different decision from refinancing and worth making separately. A longer term lowers the payment and raises the total interest, so if you need the lower payment take it knowingly rather than as part of a rate comparison.
Can I refinance only some of my loans?
Usually yes, and it is often the right answer: refinance the private ones where there is nothing to lose, keep the federal ones and their protections. Splitting them is more work and frequently the better outcome.
Does refinancing cost anything?
Student refinancing typically has no origination fee, unlike a mortgage. If a lender does charge one, work out the effective rate rather than comparing headline rates — a fee can undo a rate advantage entirely.
Will I qualify for the advertised rate?
Advertised rates go to the strongest applicants and usually assume a variable rate and autopay. Yours depends on credit, income and term. Get a soft-search quote before applying, and be clear whether the rate offered is fixed or variable.