Student Loan Refinance Calculator
Refinancing your student loans can be the smartest financial move you make this year—or a costly mistake. Our calculator helps you run the numbers to see if a lower interest rate actually puts more money in your pocket.
How Much Can You Actually Save?
When you refinance, you take out a new private loan to pay off your existing ones. The goal is to lower your interest rate, putting more money in your pocket.
Federal vs. Private Trade-off
⚠️ WARNING: If you refinance federal student loans into a private loan, you will lose access to important federal protections.
When Is Refinancing Worth It?
Not every situation calls for refinancing. Consider these scenarios:
Consolidation vs. Refinancing - What's the Difference?
These terms are often confused, but they are fundamentally different strategies:
| Aspect | Consolidation | Refinancing |
|---|---|---|
| Lender Type | Federal (Direct) | Private |
| Rate Reduction | No (weighted avg) | Yes (if qualified) |
| Federal Protections | Kept | Lost |
| Timeline | Quick | 30-45 days |
| Credit Check | Soft pull | Hard pull |
| Best For | Simplifying payments | Saving on interest |
Real-World Refinancing Scenarios
Here's how refinancing plays out in different situations. All scenarios assume no refinance fees (some lenders charge 0.5-2%):
Step-by-Step Refinancing Guide
Ready to refinance? Here's the process:
Student Loan Refinance FAQ
Q:When is the best time to refinance student loans?
The best time is when interest rates have dropped or your credit score has significantly improved since you first took out the loans. A higher credit score usually qualifies you for the lowest advertised rates. Generally, refinancing makes sense if rates have dropped by at least 0.5% and you plan to stay employed for several more years.
Q:Does refinancing student loans hurt my credit score?
When you apply, the lender will do a 'hard pull' on your credit, which might cause a temporary dip of 5-10 points. However, this dip is usually temporary. In the long run, lower payments and a better debt-to-income ratio can help your credit score recover and improve within a few months.
Q:What is the difference between consolidation and refinancing?
Federal Consolidation combines your federal loans into one monthly payment but does not lower your interest rate (it takes a weighted average). Refinancing is done through private lenders and aims to reduce your rate by qualifying based on your creditworthiness and current market rates. You lose federal protections when you refinance.
Q:Can I refinance federal student loans?
Yes, but with important caveats. When you refinance federal loans through a private lender, your loans become private. You lose access to Income-Driven Repayment plans, Public Service Loan Forgiveness, deferment, forbearance, and other federal protections. Consider this trade-off carefully.
Q:What if I can't refinance because my credit score is too low?
Several options exist: (1) Wait and build your credit for 6-12 months, (2) Add a co-signer with better credit, (3) Explore federal consolidation or income-driven repayment plans, or (4) Focus on other debt payoff strategies. Refinancing will still be available later when your score improves.
Q:Are there any fees associated with refinancing?
Some lenders charge origination fees (typically 0.5-2% of the loan amount), but many lenders offer refinancing with no fees. Always ask about closing costs before applying. Higher fees reduce your net savings, so compare the total cost, not just the interest rate.
Q:How long does the refinancing process take?
Typically 30-45 days from application to funding. The process includes a hard credit pull, verification of income and employment, underwriting, and final approval. During this time, your old lender continues to service your existing loan.