Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Refinancing federal student loans into a private loan permanently trades away specific federal protections, income-driven repayment options, forgiveness program eligibility, deferment provisions, for a potentially lower rate, so the real comparison isn't just the monthly savings: it's those savings weighed against protections that can't be reclaimed once refinanced.
Before you rely on it
What to check
List the specific federal protections currently available on the loan being refinanced, and weigh their real value against the calculated interest savings before proceeding.
The common error
Where people go wrong with student loan refinance calculator
Refinancing federal loans into a private loan based purely on the calculated interest savings. That trade permanently forfeits federal protections and forgiveness eligibility that can be worth considerably more than the modeled savings for someone who might need them.
Sensitivity evidence
How current loan balance changes the break-even time
| Current loan balance | Break-even time | Monthly payment savings |
|---|---|---|
| $248,000 | 41.5 months | $157 |
| $279,000 | 36.9 months | $176 |
| $310,000worked example | 33.2 months | $196 |
| $341,000 | 30.2 months | $215 |
| $372,000 | 27.7 months | $235 |
Every input, tested
Which input moves the break-even time most
| Input | Tested from | To | Break-even time at each end | Swing |
|---|---|---|---|---|
| Current rate | 6.3% | 8.3% | 0.0 months to 16.3 months | 16.3 months (49%) |
| New rate | 5.3% | 7.3% | 17.0 months to 0.0 months | 17.0 months (51%) |
| Current loan balance | $279,000 | $341,000 | 36.9 months to 30.2 months | 6.7 months (20%) |
| Refinance costs | $5,850 | $7,150 | 29.9 months to 36.5 months | 6.6 months (20%) |
| Remaining term | 19.0 years | 31.0 years | 35.7 months to 31.3 months | 4.5 months (13%) |
Two variables at once
Break-even time by current loan balance and current rate
| Current loan balance \ Current rate | 5.3% | 7.3% | 9.3% |
|---|---|---|---|
| $248,000 | 0.0 months | 41.5 months | 13.3 months |
| $279,000 | 0.0 months | 36.9 months | 11.8 months |
| $310,000 | 0.0 months | 33.2 months | 10.7 months |
| $341,000 | 0.0 months | 30.2 months | 9.7 months |
| $372,000 | 0.0 months | 27.7 months | 8.9 months |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Current loan balance | $310,000 |
| Current rate | 7.3% |
| New rate | 6.3% |
| Remaining term | 25.0 years |
| Refinance costs | $6,500 |
| Break-even time | 33.2 months |
| Monthly payment savings | $196 |
Where the inputs come from
Current loan balance and rate come from your servicer, remaining term is how many years are left, the new rate is a quote from a private lender, and refinance costs are any fees, though many private lenders charge none. Get several quotes, since rates depend on your credit, income and the term you choose. Before you refinance federal loans, check what protections you would lose.
Using the break-even time in a real decision
Keep the same or a shorter term to ensure a real saving.
When the result stops applying
Private lenders may require good credit and a cosigner, and variable rates can rise. Extending the term lowers the payment but can raise total interest. Rates change often, and prequalification with a soft pull lets you compare without hurting your credit. Refinancing cannot be reversed if you move federal loans to a private lender.
What to compare it with
Check the payment on the student loan payment calculator, and see the PSLF and income-driven repayment pages before giving up federal benefits. The loan comparison and APR calculators compare offers, and the student loan consolidation rate page covers federal consolidation, which is different from private refinancing.
People also ask
Frequently asked questions
What do I lose if I refinance federal loans?
Federal protections such as income-driven repayment, Public Service Loan Forgiveness, generous deferment and forbearance, and some discharge options, since the loan becomes private.
Is refinancing the same as consolidating?
No. Federal consolidation combines federal loans into a new federal loan at a weighted rate, while refinancing replaces loans with a new private loan at a new rate.
When does refinancing student loans make sense?
When you have stable income, good credit, no need for federal protections and can get a meaningfully lower rate on a similar or shorter term.