What is the Student Loan Refinance?
Refinancing replaces existing student loans with a single private loan at a new rate. For borrowers with strong credit and stable income it can cut rates by 1–3 percentage points.
The critical caveat: refinancing federal loans into private ones is irreversible. You permanently forfeit income-driven repayment, deferment, forbearance and Public Service Loan Forgiveness.
Formula & worked example
Savings = Total on current loan − total on new loan
Worked example: $62,000 at 7.05% with 12 years left costs about $639 a month and $92,052 in total. Refinancing to 5.25% over 10 years raises the payment by just $26 to $665, but cuts the total from $92,052 to $79,825 — saving roughly $12,227 while finishing two years sooner.
How to use this student loan refinance calculator
- Enter your current balance, rate and years remaining.
- Enter the new rate you have actually been quoted.
- Try matching or shortening the term — extending it can erase the saving.
- Only refinance federal loans if you are certain you will never need their protections.
Smart tips
- Never refinance federal loans if you work in public service or might need income-driven repayment — the protections are worth more than the rate cut.
- Private loans are always safe to refinance; there is nothing to lose beyond any existing lender perks.
- Variable rates start lower but can rise; fixed is safer for longer terms.
- Most lenders offer soft-pull pre-qualification, so you can compare offers without hurting your credit.
- A co-signer can secure a much lower rate, though it puts them on the hook if you default.
Frequently asked questions
Should I refinance my federal student loans?
Only if you have stable high income, will never need income-driven repayment, and do not qualify for forgiveness. The decision is permanent.
How much can refinancing save?
A 1–2% rate cut on a $62,000 balance typically saves $8,000–15,000 over the loan, more if you also shorten the term.
Does refinancing hurt my credit?
A small temporary dip from the hard inquiry. Most lenders offer soft-pull pre-qualification to compare rates first.
Can I refinance more than once?
Yes, as often as you qualify. Each refinance is a new loan, so there is no limit if rates keep falling.
Want the theory behind the numbers? Read our student loan guides on the Money Blog.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 8 Sep 2026. How we check these numbers.