Student Loan Refinance Calculator
Refinancing a $35,000 student loan from 7% to 5% over 10 years cuts the monthly payment from $406.38 to $371.23 and saves $4,218 in total interest. Shortening the same refinance to 5 years raises the payment to $660.49 but saves $9,136 overall.
Refinance changes the rate, not the balance — and the term you pick matters as much as the rate you get.
Rate and term pull in opposite directions. Dropping 7% to 5% over 10 years saves $35.15 a month and $4,218 of interest. Shortening to 5 years at 5% saves another $4,918 but raises the payment to $660.49.
Calculator
Enter your current loan and the refinance offer. Results update instantly.
How This Calculator Works
Refinancing replaces your existing loan with a new one at a different rate and term. The calculator prices both loans with the same amortization formula, so the difference is pure arithmetic: same balance, two rate-and-term pairs.
A lower rate at the same term always lowers both the payment and the total interest. A shorter term at any rate always raises the payment and lowers the total interest. Most real offers trade one against the other.
M = P × r(1+r)n / ((1+r)n − 1) — r = rate/12, n = months
Worked example
Using the defaults — $35,000 at 7% over 10 years, refinanced to 5% over 10 years:
At 7% over 120 months the formula gives $406.38 a month. Total paid is $48,765.60, so interest is $13,766.
At 5% over the same 120 months the payment falls to $371.23. Total paid is $44,547.60, so interest is $9,548.
The difference is $35.15 a month and $4,218 of lifetime interest — about 31% of the original interest bill, for signing one set of papers.
The calculator above returns these figures exactly. Origination fees are excluded here; a $1,000 fee would erase roughly 28 months of the $35.15 monthly saving.
The same $35,000 refinanced at 5%, across terms
Shortening the term at the new lower rate is the second lever. It always saves more interest and always costs more per month.
| Term | Monthly payment | Total interest | Saved vs 7%/10y |
|---|---|---|---|
| Original 7%, 10 years | $406.38 | $13,766 | $0 (baseline) |
| Refinance 5%, 10 years | $371.23 | $9,548 | $4,218 |
| Refinance 5%, 8 years | $443.10 | $7,537 | $6,229 |
| Refinance 5%, 5 years | $660.49 | $4,630 | $9,136 |
The 5-year refinance saves more than twice the 10-year refinance ($9,136 vs $4,218) but demands $660.49 a month — $289 more than the original payment. Pick the shortest term whose payment survives a bad month.
Common mistakes with this calculation
- Refinancing federal loans without pricing the protections. A lower private rate beats the federal rate on paper, but refinancing surrenders income-driven plans, deferment, and forgiveness eligibility. Value that insurance before trading it for a point.
- Ignoring origination fees. A 1% origination fee on $35,000 is $350 added to the balance on day one. At $35.15 a month saved, the fee alone takes 10 months to earn back.
- Shortening the term past what the budget allows. The 5-year saving is real only if every $660 payment actually clears. One hardship forbearance can erase the advantage over the 10-year schedule.
- Refinancing variable into variable to chase a teaser. A variable refinance rate can reset above your original fixed rate. Compare against the cap, not the introductory figure.
When this calculator does not apply
- The calculator compares two fixed-rate amortizing loans. Variable-rate paths depend on future resets it cannot know.
- It excludes origination fees, application fees, and any cash-out amount — add fees to the refinanced balance yourself for an exact quote.
- Federal protections (income-driven repayment, forgiveness programmes) change the economics and sit outside the arithmetic.
- It assumes no prepayment penalties on the original loan; confirm yours has none before signing.
Frequently Asked Questions
How much does refinancing a student loan save?
On the $35,000 example, moving from 7% to 5% over 10 years saves $35.15 a month and $4,218 overall. Your saving scales with balance and the size of the rate drop.
Is a shorter refinance term always better?
It always saves more interest and always raises the payment. The 5-year option here saves $9,136 but costs $660.49 a month versus $371.23 on the 10-year. Better means affordable first, cheaper second.
Should I refinance federal student loans?
Only after pricing what you give up: income-driven repayment, deferment, and forgiveness eligibility disappear permanently on refinance. If your income is stable and high, the trade often wins; otherwise it rarely does.
Do refinance calculators include fees?
This one prices rate and term only, which is why the worked example states the exclusion plainly. Add any origination fee to the balance field to see its true cost.
Sources & Methodology
This calculator uses standard financial formulas. See our methodology page for the full derivation.
- Repaying Student Debt Consumer Financial Protection Bureau
- Federal Student Aid: Repayment Plans U.S. Department of Education
Last reviewed .
Key takeaways
- $35,000 at 7%/10y costs $406.38 a month and $13,766 of interest.
- Refinancing to 5%/10y saves $35.15 a month and $4,218 overall.
- The 5-year refinance saves $9,136 but demands $660.49 a month.
- Add origination fees to the balance — a $1,000 fee erases 28 months of saving.
- Federal loans carry protections a private refinance permanently removes.