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Student loan refinance calculator3/21/2024 Using the calculator above, you can see if you refinance $100,000 of federal debt at a 6% rate to a 5% rate, for example, you’ll save nearly $1,000 in the first year. The first way refinancing your student loan saves you money is by cutting your interest rate. This is the reason for points 2 and 3.Īssuming you passed this refinancing test and know you should refinance, what kind of savings could you expect? 2 ways to save with the student loan refinancing calculator If you don’t have an emergency fund and won’t be able to make payments (remember they may be higher), the savings shown in this refinancing calculator could be pointless.įorgiveness programs are generally a better plan when you owe a lot, relative to your income. When you refinance, you lose government protections on your loan debt, such as loan forgiveness and income-based repayment options. There’s no chance you could benefit from federal loan programs like the Public Service Loan Forgiveness (PSLF) program.Your debt-to-income ratio is below 1.5 to 1 (meaning, for example, you make $100,000 but owe less than $150,000 of student debt).You have at least three months’ expenses in the bank (emergency fund).How to know if refinancing your student loan is a good ideaįor federal student loans, you should only refinance if the following three points hold true - we call this our refinancing test: Read on to find out how your refinancing calculator results measure up in student loan refinancing. In fact, you can use this as a strategy to pay your loans off faster and earn more cash back bonuses. It does not cost anything to refinance a student loan and it is also not bad to refinance multiple times. Typically, finding rates will not impact your credit, but companies will often require a hard credit pull before officially taking on your loan. That is the downside to refinancing.īut in the right situation, it can save you lots of money on your student loan debt repayment. You should also be willing and able to give up the benefits and protections of federal loans. Student loan refinancing is worth it if you are in a financially stable situation.
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