Phase 4 · General Utility
Student Loan Refinance Calculator
A lower rate can save you thousands — or a longer term can quietly cost you more. Compare your current loan against a refinance and see interest, payment and payoff side by side.
Should I refinance my student loans?
Refinancing helps only when the rate drop outruns any term extension. Keep the term the same and a lower rate is pure saving. Stretch the term to cut the payment and you can pay more interest overall despite the better rate — the monthly number improves while the total cost quietly worsens.
- Worked example (defaults on this page): $40,000 over 10 years refinanced from 7.5% to 5.5% drops the payment from $474.81 to $434.11 and total interest from $16,977 to $12,093 — saving $4,884.
- Compare on total interest, not payment. Re-amortising that balance over 15 years at the lower rate would cut the monthly further while raising the lifetime cost.
- Any extra payment goes entirely to principal, so principal = payment + extra − interest shortens the term without changing the rate.
- Refinancing federal loans into a private one permanently forfeits income-driven repayment, forbearance and forgiveness programs. That protection has real value even when the maths favours refinancing.
Under the hood
The math, fully exposed
We amortize both loans in full and compare the total interest each one charges:
Monthly payment = P × r × (1+r)n ÷ ((1+r)n − 1)
Each month: interest = balance × r; principal = payment + extra − interest
Total interest = sum of monthly interest until paid off
Interest saved = current total interest − new total interest
- Rate vs term: a lower rate always saves interest; a longer term lowers the payment but adds interest. The big wins come from cutting the rate while keeping (or shortening) the term.
- Extra payments stack: any extra on the new loan goes straight to principal, compounding the savings on top of the lower rate.
- The math ignores what you give up: see the directive below — refinancing federal loans forfeits protections this calculator can't price.
Your directives
What to do next, based on your numbers
Adjust the sliders to generate tailored recommendations.
Answers
Frequently asked questions
Should I refinance my student loans?
Refinancing makes sense when a lower rate saves you meaningful interest and you have stable income. The catch: refinancing federal loans into a private loan permanently gives up federal protections. So the honest rule is — refinance if (a) you can get a clearly lower rate, and (b) you're confident you won't need federal benefits.
What do I give up by refinancing federal student loans?
A lot, and it's irreversible: income-driven repayment plans, Public Service Loan Forgiveness (PSLF), generous deferment and forbearance, and any future federal forgiveness or pauses. Private refinancing converts all of that into a standard private loan. Refinancing private loans into private loans carries none of this downside.
How much can refinancing actually save me?
It depends on the rate gap, balance and time left. Dropping from 7.5% to 5.5% on a $40,000 balance over 10 years saves roughly $5,000 in interest and can lower the monthly payment. The bigger your balance and rate reduction, the larger the saving — this calculator shows your exact figure.
Does a longer term lower my payment?
Yes — stretching the term reduces the monthly payment, but you pay interest for more years, so total interest rises even at the same rate. Watch both numbers here: a lower monthly payment with a higher lifetime cost is a cash-flow choice, not a savings one.