Student Loan Refinance Break Even Calculator
This calculator identifies the month when accumulated savings from a lower refinanced rate have covered the closing costs of switching lenders. Enter your balance, current rate, new rate, remaining term, and closing costs. If you pay off or refinance again before that month, you lose money on the transaction.
New monthly payment
You pay today, so that is a month back in your pocket.
That is more than the you pay today — the shorter term costs more each month but clears the debt sooner.
- Over the whole termStay putRefinance
- Monthly payment
- Interest you pay
- Debt-free
- Total paid
No switching cost to earn back — you are ahead from the first payment, by over the life of the loan.
You earn the switching cost back after payments — around .
At these numbers the new loan never pays for itself: the monthly payment does not fall.
Careful — the lower payment comes from a longer term. Over the full term this deal costs more than staying put.
Both loans are modelled as fixed-rate, fully amortising, with no missed months. A refinance replaces your loan with a brand-new private loan — see what that costs you below.
Rate drop
Monthly change
Interest saved
Lifetime saving
What you give up when federal loans go private
- Income-driven repayment. A private lender sets one payment; it does not fall when your income does.
- Federal forgiveness programmes, including Public Service Loan Forgiveness and any income-driven forgiveness after the full repayment term.
- Federal discharge on death or total and permanent disability — private lenders decide their own policy.
- Federal deferment and forbearance rights, and the federal rehabilitation route out of default.
- The decision is one-way. Once a federal loan is refinanced privately, it cannot be turned back into a federal loan.
Refinancing private loans into a cheaper private loan gives up none of this — it is federal balances that carry the risk.
How the Break-Even Month Is Calculated
Break-even divides your total closing costs by the monthly payment difference between the old loan and the new one. If refinancing an $80,000 balance drops your monthly payment by an illustrative $65, and closing costs total $1,300, the break-even arrives at month 20. Every month beyond that point represents net savings; every month before it represents a loss.
The calculation is straightforward, but the inputs require care. Some lenders fold closing costs into the new balance rather than charging them up front, which raises the principal and slightly increases both the monthly payment and total interest. The calculator handles both scenarios: enter zero for up-front costs and add the folded amount to your new balance, or enter the cash amount and keep the balance unchanged. Either way, the tool returns the same break-even month and shows the total interest paid under each path so you can see the full cost of each approach.
The Term-Extension Trap
Refinancing often resets your repayment clock. If you have six years left on your current loan and refinance into a fresh ten-year term, the monthly payment drops sharply, but total interest paid over the life of the loan can rise even at a lower rate. The break-even month will look attractive because the monthly savings are large, yet the borrower pays more overall.
The calculator surfaces this by displaying both the monthly savings and the lifetime interest difference. If the lifetime interest figure is higher on the new loan despite a lower rate, the term extension is costing you more than the rate reduction saves. Refinancing federal loans into a private loan is irreversible and removes access to IDR, PSLF, forbearance, and disability discharge. Before committing, compare the break-even month against how long you realistically plan to hold the new loan. For a broader worth-it analysis, see the refinancing decision calculator.
Closing-cost and rate examples are illustrative. Actual lender terms vary. This calculator does not constitute a loan offer.
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Sources
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Sources: standard amortization math (break-even = closing costs / monthly savings); r/StudentLoans refinancing regret discussions (2024-2026).
- 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.