This page explains exactly how StudentLoanRefi's savings estimate is calculated, what assumptions it makes, and what it deliberately does not attempt to model. We publish this openly so you can judge for yourself whether the estimate is reasonable for your situation, rather than treating the output as a black box.
The calculator uses the standard fixed-rate loan amortization formula, the same math lenders use to calculate a level monthly payment that fully repays a loan balance over a set number of months. For a loan balance P, a monthly interest rate r (the annual rate divided by 100, then by 12), and a number of monthly payments n (years times 12), the fixed monthly payment is:
Payment = P × r / (1 − (1 + r)−n)
Once the monthly payment is known, total interest paid over the life of the loan is simply the total of all payments made minus the original balance: Total interest = (Payment × n) − P. The calculator runs this formula twice — once using your current balance, rate, and remaining term, and once using the same balance with your estimated new rate and new term — then shows the difference between the two total-interest figures as your estimated lifetime interest savings, along with the change in monthly payment.
Both the "current loan" and "new loan" calculations start from the same balance you enter. That's intentional: a real refinance pays off your existing balance and reissues it as a new loan, so a fair before-and-after comparison assumes the same starting principal in both cases. If you enter your original loan amount instead of what you currently owe, the estimate will overstate how much interest remains on your current loan and distort the comparison — always use your present-day remaining balance and remaining term, not the loan's original terms.
It does not check your credit, income, debt-to-income ratio, or any other underwriting factor. The "estimated new refinance rate" field is a number you supply, not a rate this tool determines. Your actual qualifying rate from any real lender depends entirely on that lender's own underwriting criteria.
It does not represent any specific lender's current rates, fees, or terms. This is an independent, lender-neutral tool. It has no live connection to any lender's rate feed, and any resemblance between the numbers you enter and a real advertised rate is coincidental unless you've entered a rate you were personally quoted.
It does not account for origination fees, prepayment penalties, or other loan costs. If a lender you're considering charges an upfront fee, that cost should be weighed separately against the interest savings this calculator shows — a lower-rate loan with a large origination fee can take months or years of interest savings just to break even on that fee.
It does not model variable interest rates. Every calculation here assumes a fixed rate for the full term you enter. If you're comparing a variable-rate offer, run the calculator once using the lender's current variable rate and again using a higher rate you consider a realistic worst case, so you can see how sensitive the outcome is to the rate moving.
It does not evaluate whether refinancing federal loans is a good idea for you. The interest math is identical whether a loan is federal or private, but the consequences of refinancing a federal loan — permanent loss of income-driven repayment, deferment, forbearance, and forgiveness eligibility — are not something an amortization formula can quantify. See our Refinancing vs. Keeping Federal Loans guide for that decision.
Displayed dollar figures are rounded to the nearest whole dollar for readability; the underlying calculation itself is not rounded until the final display step. If a 0% interest rate is entered, the calculator switches to a simple straight-line division of balance over the number of payments, since the standard amortization formula is undefined at a 0% rate. The calculator does not currently reject nonsensical inputs (for example, a payment term of 0 years), so we recommend double-checking that both the current and new term fields reflect a realistic number of years before reading the result.
Every number this calculator produces is an educational estimate based on simplified amortization math and the values you provide. It is not a loan offer, a rate lock, a pre-approval, or a guarantee of any kind, and it should not be treated as personalized financial, legal, or tax advice. Confirm any rate, term, or fee directly with a lender or your current loan servicer, and check studentaid.gov for anything related to your federal loan status, before making a refinancing decision.
If a result on the calculator page doesn't match what you expected, the most common cause is entering an original loan term or original balance instead of your current remaining term and remaining balance. Try re-running the numbers with your most recent loan statement in hand, and see our FAQ page for more on how the inputs are meant to be used.