Student Loan Refinance Break-Even Calculator

Compare your current student loan against a refinance offer's rate and term to see the difference in monthly payment and total interest paid over the life of the loan.

The same balance, amortised twice

Your balance is scheduled on your current rate and term, then on the offer's, and the two lifetime totals subtracted. With r the monthly rate and n the payments:

payment(r, n) = B x r x (1 + r)^n / ((1 + r)^n - 1)
lifetime cost = payment x n
saving        = current lifetime cost - refinance lifetime cost

On the defaults - $25,000 with ten years left at 7%, refinanced to 5% over ten years - the payment falls from $290.27 to $265.16 and the lifetime cost from $34,833 to $31,820. Two points of rate are worth $3,013 over the decade but only $25.11 a month.

Compare like for like, or not at all

Change the refinance term and the comparison stops meaning anything. Take that same 5% offer over fifteen years and the payment drops to $197.70 - $92.57 a month better - but the lifetime cost climbs to $35,586, which is $753 more than leaving the 7% loan alone. Run the offer at your existing term first to see what the rate alone is worth.

There is no fee box, so subtract any origination charge from the saving yourself. The larger cost is not in the arithmetic: refinancing federal loans with a private lender ends the federal repayment and forgiveness options attached to them, and it cannot be undone.

Frequently asked questions

Is refinancing student loans worth it?

Financially, when the rate drops and the term does not: 7% to 5% on $25,000 with ten years to run saves $3,013. Against that sits everything a private loan cannot offer.

Why does a lower rate cost me more here?

Because you extended the term. Fifteen years at 5% costs $35,586 against $34,833 for ten years at 7% - the extra five years of interest more than eat the rate cut.

Does a shorter term save much?

A great deal. The same $25,000 at 5% over five years costs $471.78 a month and only $3,307 in interest, against $9,833 on the current ten-year loan.