Refinance vs. keep federal loans calculator

How this calculator works

This tool compares two paths month by month: staying on federal loans under the plan you select (Standard, SAVE, PAYE, IBR, or ICR) versus refinancing the full balance into a fixed-rate private loan. The federal path uses your AGI and family size for IDR payment estimates, applies SAVE interest subsidy when relevant, and models forgiveness at 120 payments for PSLF or at the plan's IDR forgiveness horizon otherwise. The private path uses standard amortization with no forgiveness. You see monthly payments, total cash paid, forgiven amounts, net difference, and a cumulative-paid chart. An irreversible-loss warning appears because refinancing federal loans into private debt generally cannot be undone.

The comparison is educational — private lenders quote rates individually, and federal rules change. Use results to frame questions for your servicer and any lender you contact, not as a binding cost guarantee. Pair with the plan comparison calculator if you have not yet chosen a federal plan, and the PSLF checklist if public service forgiveness is on the table.

What affects the result

The spread between your current federal rate and offered private rate is the starting point — but not the whole story. Federal plan choice changes monthly payment and forgiveness timing. PSLF can forgive a large remaining balance tax-free, which often swamps rate savings. Qualifying payments already made shorten the remaining PSLF window. Lower private rate with the same term reduces payment and total interest, but extending term lowers payment while increasing total interest. AGI affects IDR paths only; Standard federal payment ignores income. Loan type (undergrad vs. grad) changes SAVE percentage and forgiveness months. Credit score and co-signer status affect whether the private rate you enter is realistic.

Real-world examples

Example 1 — Stable high income, no PSLF: $35,000 at 6.53% federal vs. 4.5% private refi on a 10-year term. Monthly payment drops and total paid may fall thousands if income stays high and forgiveness is unlikely.

Example 2 — PSLF at year 8: A borrower with 96 qualifying payments models 24 months to forgiveness. Refinancing would erase PSLF eligibility and leave tens of thousands still payable — federal almost always wins.

Example 3 — SAVE with low payment: Low AGI produces a small IDR payment with subsidy preventing balance growth. Total cash paid stays low for years; refi would require full amortization immediately.

Example 4 — Longer private term: Refi at 4.5% over 15 years vs. federal 10-year Standard lowers monthly payment but may not reduce lifetime cost. Compare total paid, not payment alone.

Example 5 — Mid-career with no forgiveness path: A borrower with $48,000 at 7.1% federal, $95,000 AGI, and no PSLF eligibility models SAVE vs. a 5.25% private 10-year refi. Federal IDR may cap near Standard anyway at that income, making rate savings the main variable — but federal deferment rights remain on the federal path.

Example 6 — Split portfolio (manual scenario): A borrower with $20,000 Grad PLUS at 8.05% and $15,000 undergrad at 5.5% might refinance only the PLUS portion privately. This calculator models one combined balance — run separate scenarios for each portion to approximate a split strategy.

Common mistakes

Refinancing because the rate quote looks good. Rate is one variable. Federal protections can be worth more than a 2-point rate cut.

Ignoring PSLF progress. Even 24 months of qualifying payments can be worth more than years of interest savings.

Comparing refi payment to Standard only. If you would actually enroll in SAVE or PAYE when staying federal, select that plan in the calculator.

Forgetting taxable IDR forgiveness. Non-PSLF forgiveness can create a large tax bill. Federal total cost may be higher than the table shows after taxes.

Assuming you can refi back to federal. Consolidation of private loans back into federal programs is not available for refinanced private debt.

Using variable-rate quotes without stress testing. This calculator uses fixed rates. Variable private rates can rise later.

When to use this calculator

Run this before contacting private lenders when you have strong credit and steady income, or when a lender ad tempts you with a lower rate. Also use it to sanity-check that PSLF or long-horizon IDR still beats refi. If payments are unaffordable, compare IDR options first with the plan comparison calculator rather than refinancing. Anyone in public service, nonprofit work, or with uncertain income should treat refi as a last resort. The state vs. federal reference summarizes protections you give up by leaving federal loans.

Limitations

Private rates are quotes, not guarantees — lenders reprice based on credit, income, and debt-to-income ratio. Variable-rate private loans are not modeled. Non-PSLF IDR forgiveness may trigger federal tax that this tool does not estimate. State tax on forgiveness is not included. The calculator assumes continuous employment and on-time payments; job loss or delinquency changes both paths. Federal program rules — including SAVE litigation outcomes — can change after you run a scenario.

Sources

1. Federal Student Aid — Income-driven repayment
2. Federal Student Aid — Public Service Loan Forgiveness
3. IRS — Cancellation of debt (1099-C)