Purpose and steps
Calculate the current and new fixed payments from balance, APR, and term. Lifetime savings equals current remaining interest minus refinanced interest and the entered fee. The calculation runs locally and keeps cash-flow timing consistent with the stated assumptions.
- Confirm currency and monthly versus annual amounts. U.S. tax and loan models should be used within their stated scope.
- Prepare Student loan balance, Current annual rate, Current remaining term, Refinance annual rate, Refinance term, Refinance fee. Defaults demonstrate the model rather than your personal circumstances.
- Check the headline result and its components. A key interpretation for this tool is: A positive lifetime result means the modeled interest reduction exceeds the fee.
- Compare the baseline with a changed scenario: Federal loans refinanced into a private loan leave the federal student-aid system and can lose federal benefits.
Input reference and units
These values reproduce the model’s demonstration. Replace them with your own records or measurements; they are not recommended targets.
On a small screen, swipe the table horizontally to see all columns.
| Parameter | Demonstration value | How to enter it |
|---|---|---|
| Student loan balance | 45000 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Current annual rate | 6.8 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
| Current remaining term | 10 years | Use years here. The model converts to months when the payment schedule requires it. |
| Refinance annual rate | 5.25 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
| Refinance term | 10 years | Use years here. The model converts to months when the payment schedule requires it. |
| Refinance fee | 0 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
Model-specific method
How this calculator produces its result
Calculate the current and new fixed payments from balance, APR, and term. Lifetime savings equals current remaining interest minus refinanced interest and the entered fee.
Solve the break-even equation, then round the period
Break-even sets cumulative benefit equal to the cost to recover. Dividing solves the linear equation only if benefit per period stays constant. A result of 30.2 months means the original cost has not yet been fully recovered at month 30; whole-month reporting rounds up to 31.
A nonpositive saving or contribution has no finite simple payback for a positive initial cost. Payback also ignores what happens after recovery and the time value of money. For refinancing, compare remaining balances and cumulative interest; for a business, check capacity and whether fixed costs rise as sales increase.
Simple payback = upfront cost / saving per period Break-even units = fixed cost / (price − variable cost) Whole periods or units = ceil(calculated result)
- Upfront cost: incremental cash paid now
- Saving: recurring difference between matched scenarios
- Contribution: price minus variable cost per unit
- ceil: smallest integer not below the calculated value
Worked example
A lower rate can still raise total interest if the new term is much longer. Compare the monthly savings with lifetime savings after the fee.
Reproduce the default scenario
This is a separate example, calculated using the exact engine on the tool page and the defaults in the input reference above. Health examples use metric units. Displayed rounding may differ from intermediate precision.
- Estimated lifetime savings after fee
- 4,205.86 USD
- Current monthly payment
- 517.86 USD
- Refinanced monthly payment
- 482.81 USD
- Monthly payment savings
- 35.05 USD
- Current remaining interest
- 17,143.38 USD
- Refinanced interest
- 12,937.52 USD
- Refinance fee
- 0 USD
- Fee break-even time
- 0 months
Reading results without overstating them
- A positive lifetime result means the modeled interest reduction exceeds the fee.
- Federal loans refinanced into a private loan leave the federal student-aid system and can lose federal benefits.
Assumptions and exclusions
- This fixed-rate comparison does not value federal repayment plans, forgiveness, deferment, forbearance, subsidies, variable rates, credit qualification, or tax deductions. Review the lender offer and federal-loan benefits before acting.
Sources and content notes
Toolify describes the implemented algorithm and its assumptions. Sources below support the topic or applicable rules; they do not endorse this calculator. Examples are illustrative, and published rules take precedence over simplified estimates.
- Federal Student Aid — refinancing and federal-loan benefits
- CFPB — Your Money, Your Goals: debt repayment tools
Report a formula, example or translation issue through our contact page. Include the tool name, inputs and expected result so it can be reproduced. Contact Toolify