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.