PSLF vs Refinance Calculator
This calculator compares the total cost of remaining on Public Service Loan Forgiveness against refinancing to a private loan and repaying in full. Enter your balance, qualifying payments completed, current monthly payment, and a private rate offer. PSLF forgiveness is tax-free, making it the only federal path where the forgiven amount carries no income-tax liability.
Estimated tax on the forgiven balance
On forgiven — an effective of the amount written off.
- Federal taxat the marginal rate you entered
- State tax
- Total bill
- Set aside each monthstarting now, no interest assumed
- Debt written off, after tax
Put aside every month — about a week — and the bill is covered when it lands.
The American Rescue Plan Act's exclusion for forgiven student debt expired on 31 December 2025, so income-driven forgiveness is federally taxable again from 2026. Public Service Loan Forgiveness and total and permanent disability discharge are treated differently. States set their own rules. This is a marginal-rate estimate, not tax advice — confirm with a tax professional.
Why PSLF Forgiveness Is Tax-Free
The ARPA exemption that shielded forgiven student loan balances from federal income tax expired on December 31, 2025. From 2026 onward, any balance forgiven under an income-driven repayment plan such as RAP, IBR, or ICR is taxed as ordinary income. PSLF stands apart: forgiveness under Public Service Loan Forgiveness has always been excluded from gross income under IRC Section 108(f)(1), and neither the ARPA expiry nor OBBBA (P.L. 119-21) changed that status.
This tax distinction drives the comparison. A borrower with $90,000 forgiven under IDR at a 22% marginal rate faces roughly $19,800 in federal tax. The same balance forgiven under PSLF triggers no tax at all. For high-balance borrowers in qualifying public-service employment, the tax savings alone can outweigh years of higher payments on the federal plan. Enter your projected forgiven balance and marginal rate to see the tax difference as a concrete dollar figure.
When Refinancing Beats PSLF
Refinancing wins over PSLF in a narrow set of circumstances. If you are unlikely to complete 120 qualifying payments because you plan to leave public service, your employer does not qualify, or your income will push IDR payments close to the standard repayment amount, then carrying a higher federal rate for years without reaching forgiveness can cost more in total interest than a private loan at a lower rate.
Refinancing federal loans into a private loan permanently eliminates your access to income-driven repayment, PSLF, federal forbearance, and death and disability discharge. The calculator lets you test both outcomes: total paid if you complete PSLF versus total interest on a private refinance. If your employer status is uncertain, run the tool at your current payment count and at a worst-case exit point to see how sensitive the result is. Borrowers on student-loan forums report that this sensitivity test often reveals PSLF is worth staying on even when the monthly payment feels high.
PSLF requires 120 qualifying payments under an eligible repayment plan while employed full-time by a qualifying public-service employer. Verify your payment count with your servicer.
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Sources
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Sources: IRC Section 108(f)(1) (PSLF tax exclusion); ARPA Section 9675 expiry (Dec 31, 2025); ed.gov PSLF eligibility requirements; OBBBA P.L. 119-21.
- Federal Direct Consolidation Loan interest rate — the weighted average of the loans being consolidated, rounded up to the nearest one-eighth of one percent (Federal Student Aid, studentaid.gov, Loan Consolidation).
- Amortisation, daily interest accrual and payoff arithmetic — standard loan mathematics; every figure on this page is computed from the numbers you enter.