Student Loan Refinance Calculator

What This Calculator Does

The Student Loan Refinance Calculator helps you compare your current student loan with a potential refinancing offer. By entering details about your existing loan and a new refinance option, you can quickly estimate your new monthly payment, total interest savings, break-even period, and how refinancing impacts your debt-to-income ratio. This tool empowers you to make informed decisions about refinancing, so you can maximize your savings and better manage your finances.

How to Use This Calculator

1. Enter Your Current Loan Details: Input your remaining loan balance, current interest rate, number of months left on your existing loan, and your current monthly payment.
2. Provide New Loan Offer Info: Enter the proposed new interest rate, new loan term (in months), and any one-time refinancing fee.
3. Add Your Financial Snapshot: Fill in your gross monthly income and your total monthly expenses, excluding your student loan payment.
4. Review Your Results: The calculator instantly displays your new monthly payment, how much you will save each month, total interest savings over the loan’s life, the break-even period for the refinancing fee, and your updated debt-to-income (DTI) ratio.
5. Compare & Decide: Use the detailed breakdown to weigh the pros and cons of refinancing, considering your long-term financial goals and monthly budget.

Definitions of Key Terms

Current Balance

The remaining amount you owe on your existing student loan.

Current Interest Rate

Your annual interest rate for your current loan, expressed as a percentage.

Remaining Term

The number of months left to pay off your existing loan in full.

Current Monthly Payment

The amount you currently pay each month toward your student loan.

New Interest Rate

The proposed annual interest rate for your refinanced loan.

New Loan Term

The total number of months you would take to repay the refinanced loan.

Refinancing Fee

A one-time fee charged by the lender for processing your refinance.

Monthly Income

Your gross monthly earnings before taxes and deductions.

Monthly Expenses

Your total regular monthly expenses, not including your student loan payment.

New Monthly Payment

The projected amount you would pay each month if you refinance your loan at the new rate and term.

Monthly Savings

How much less you would pay each month with the refinanced loan compared to your current monthly payment.

Total Interest Savings

The total amount of interest you would save over the life of the loan by refinancing, after accounting for the refinancing fee.

Break-even Period

The number of months it takes for your monthly savings to offset the cost of the refinancing fee.

Debt-to-Income Ratio (DTI)

The percentage of your gross monthly income that goes toward debt payments (including your new loan payment and other expenses). A lower DTI generally improves your financial health and borrowing potential.

Calculation Methodology

Convert annual interest rates to monthly rates:
currentMonthlyRate = currentInterestRate / 12 / 100
newMonthlyRate = newInterestRate / 12 / 100

Calculate current loan's remaining interest cost:
currentTotalPayment = currentMonthlyPayment * remainingTerm
currentTotalInterest = currentTotalPayment - currentBalance

Calculate new monthly payment for refinanced loan:
newMonthlyPayment = (currentBalance * newMonthlyRate * (1 + newMonthlyRate) ^ newLoanTerm) / ((1 + newMonthlyRate) ^ newLoanTerm - 1)

Calculate total payment and interest on new loan:
newTotalPayment = newMonthlyPayment * newLoanTerm + refinancingFee
newTotalInterest = newTotalPayment - currentBalance - refinancingFee

Monthly savings:
monthlySavings = currentMonthlyPayment - newMonthlyPayment

Total interest savings (after refinancing fee):
totalInterestSavings = currentTotalInterest - newTotalInterest - refinancingFee

Break-even period (months to recoup refinancing fee):
breakEvenPeriod = refinancingFee / monthlySavings

Calculate debt-to-income ratio:
debtPayments = newMonthlyPayment + monthlyExpenses
debtToIncomeRatio = (debtPayments / monthlyIncome) * 100

Practical Scenarios

• Lowering Your Monthly Payment: If your current loan payment is straining your monthly budget, refinancing to a longer term at a lower interest rate can reduce your monthly payment, freeing up cash for other needs. Use the calculator to see the tradeoff between a lower payment and potentially higher total interest.
• Accelerating Debt Payoff: If you receive a lower rate and keep your repayment term the same or shorter, the calculator will show how much interest you can save and how quickly you can pay off your loan.
• Managing Debt-to-Income Ratio: If you are planning to apply for a mortgage or other loan, reducing your student loan payment through refinancing can improve your DTI ratio, making you more attractive to lenders.
• Evaluating Refinancing Fees: If your lender charges a significant refinancing fee, use the break-even period output to understand how long it will take to recoup that cost through monthly savings.

Advanced Tips & Best Practices

• Compare Multiple Offers: Input several refinance options to see which lender provides the best balance of rate, term, and fees. Even small differences in rates can add up to thousands of dollars in savings.
• Consider Loan Term Carefully: Shorter loan terms usually mean higher monthly payments but much lower total interest. Use the calculator to model how different terms affect your long-term costs.
• Factor in All Expenses: For a realistic DTI ratio, make sure your monthly expenses include all regular obligations such as rent, car payments, utilities, and insurance.
• Check for Prepayment Penalties or Loss of Protections: Some federal student loans offer benefits like income-driven repayment or forgiveness programs. Refinancing into a private loan may forfeit these options.
• Assess Break-even Timeline: If you plan to pay off your loan early or expect to move soon, ensure you will reach the break-even point before making any big financial changes, so your refinancing fee is worthwhile.

Frequently Asked Questions (Optional)

Will refinancing always save me money?

Not always. Savings depend on your new interest rate, loan term, and any fees. The calculator shows if your monthly payment and total interest will decrease, and how long it takes to break even on the fee.

Does this calculator include federal loan benefits?

No. The calculator assumes standard fixed-rate loans. If you have federal student loans, refinancing may mean giving up income-driven repayment or forgiveness programs.

How accurate are these results?

The calculator uses standard formulas for fixed-rate loans, but actual lender offers, fees, or terms may differ. Always review your lender’s disclosures before refinancing.