# Student loan refinance: is it worth it?

Compares what you owe on your student loans now with a new loan at a new rate and term: the monthly payment, the interest left, the net saving after fees, and the months for the fees to pay off.

- Page: https://www.acalculator.org/finance/student-loan-refinance-calculator
- JSON spec: https://www.acalculator.org/finance/student-loan-refinance-calculator.json
- Version: 09ab17d261c6

## Default answer

Example with the default inputs (Student loan balance $40,000.00, Current interest rate 7%, Months left to pay 96, New interest rate 5.5%, New loan term (years) 8, Fees to refinance $0.00): Refinancing changes your payment from $545.35 to $515.97 a month, a net saving of $2,820.08 after fees.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| balance | Student loan balance | The total you still owe on the loans you would refinance. |
| rate | Current interest rate | The fixed yearly rate you pay now; for several loans, their rate weighted by balance. |
| left | Months left to pay | The number of monthly payments left on your loans now, for example 96 for 8 years. |
| newRate | New interest rate | The fixed yearly rate a lender offers on the new loan. |
| newYears | New loan term (years) | The length of the new loan, often 5, 7, 10, 15 or 20 years. |
| costs | Fees to refinance | Any origination or other fees for the new loan, paid in cash. Many lenders charge none. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| saving | Monthly saving | Current payment − new payment. Negative means the new payment is higher. |
| newPayment | New monthly payment | Balance × r ÷ (1 − (1 + r)^−n) at the new rate and term. |
| oldPayment | Current monthly payment | The level payment that repays the balance in the months left. |
| oldInterest | Interest left on your loans now | Current payment × months left − balance. |
| newInterest | Interest on the new loan | New payment × new months − balance. |
| net | Net saving | Interest left now − interest on the new loan − fees. |
| breakEven | Months to recover the fees | Fees ÷ monthly saving, rounded up, when there are fees and a saving. |
| oldTotal | Total you would repay now | Balance + interest left now. |
| newTotal | Total you would repay after refinancing | Balance + interest on the new loan + fees. |

## Method

payment = balance × r ÷ (1 − (1 + r)^−n), r = yearly rate ÷ 1200; now: n = months left; new: n = years × 12. Interest = payment × n − balance; net saving = interest now − new interest − fees; months to recover the fees = ⌈fees ÷ monthly saving⌉.

## Assumptions

- Both loans are fixed-rate with level monthly payments; the current payment is the one that repays the balance in the months left.
- Fees are paid in cash, not added to the new loan.
- Refinancing federal loans with a private lender gives up federal repayment plans, forgiveness and other protections; the calculator counts money only.
- Type the rates you are offered; no live rates.

## Worked examples

1. balance = $40,000.00, rate = 7%, left = 96, newRate = 5.5%, newYears = 8, costs = $0.00 gives oldPayment = $545.35, newPayment = $515.97, saving = $29.38, oldInterest = $12,353.47, newInterest = $9,533.40, net = $2,820.08. Source: Consumer Financial Protection Bureau, What is amortization and how could it affect my auto loan? https://www.consumerfinance.gov/ask-cfpb/what-is-amortization-and-how-could-it-affect-my-auto-loan-en-771/ (retrieved 2026-10-05).
2. balance = $40,000.00, rate = 7%, left = 96, newRate = 5.5%, newYears = 15, costs = $500.00 gives newPayment = $326.83, newInterest = $18,830.01, net = -$6,976.54, breakEven = 3. Source: Consumer Financial Protection Bureau, Should I consolidate or refinance my student loans? (refinancing federal loans into a private loan gives up federal repayment plans, forgiveness and other protections, and cannot be undone), https://www.consumerfinance.gov/ask-cfpb/should-i-consolidate-refinance-student-loans-en-561/ (retrieved 2026-10-05).
3. balance = $60,000.00, rate = 0%, left = 120, newRate = 0%, newYears = 10, costs = $0.00 gives saving = $0.00, oldPayment = $500.00, newPayment = $500.00, net = $0.00.

## FAQ

### How do I know if refinancing my student loans saves money?

Compare the interest left on your loans now with the interest on the new loan, plus any fees. The net saving is the difference. A lower rate over the same or a shorter term saves money.

### Why can a lower payment cost more?

A longer term spreads the balance over more payments. $40,000 at 5.5% over 15 years is $326.83 a month, $218.52 less than now, but the interest rises from $12,353 to $18,830.

### What do I give up by refinancing federal student loans?

A private refinance ends the federal loan: you lose income-driven repayment, deferment, forbearance, Public Service Loan Forgiveness and other federal protections, and it cannot be undone (CFPB).

### What are the months to recover the fees?

Fees ÷ the monthly saving, rounded up: how many months of lower payments it takes to earn the fees back. With $500 of fees and a $218.52 saving it is 3 months.

### How is the current payment worked out?

As the level payment that repays your balance in the months left at your current rate. If your actual payment differs (for example on an income-driven plan), the comparison is a guide only.

### Does the calculator use today’s refinance rates?

No. Type the rate a lender offers you; the site shows no live rates.

## Sources

- Consumer Financial Protection Bureau, Should I consolidate or refinance my student loans? https://www.consumerfinance.gov/ask-cfpb/should-i-consolidate-refinance-student-loans-en-561/ (retrieved 2026-10-05)
- Consumer Financial Protection Bureau, What is amortization and how could it affect my auto loan? https://www.consumerfinance.gov/ask-cfpb/what-is-amortization-and-how-could-it-affect-my-auto-loan-en-771/ (retrieved 2026-10-05)