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Refinance or stay on income-driven repayment?

Compare the estimated lifetime cost of a private refinance offer with a federal income-driven repayment plan—including possible forgiveness and taxes.

Refinancing means a new private loan pays off your current loans, ideally at a lower rate. Income-driven repayment (IDR) is a federal plan with payments tied to income; a remaining balance may be forgiven after 20 or 25 years and is generally treated as taxable income under this calculator’s assumption.

Your current federal loans

Use the combined balance and weighted average rate for the loans you are comparing.

$

%

$
Used as a cash-flow reference in the explanation.

$
Enter 0 if your current IDR estimate is $0.

%
This model treats the forgiven balance as taxable income in the year it is forgiven.

Your refinance offer

Enter the fixed rate and repayment term from the private lender’s offer.

%

years

Method

The refinance estimate uses the standard fixed-payment amortization formula. The IDR estimate simulates the balance month by month at the current interest rate, subtracting the entered payment without adding special interest-capitalization events. Estimated forgiveness tax equals the remaining balance multiplied by the tax rate you entered. This is a simplified model.

What is excluded

  • Interest capitalization events and changing IDR rules
  • Changing income and yearly IDR payment adjustments
  • State taxes on forgiveness
  • Refinance fees or origination costs
  • Variable-rate behavior
  • Public Service Loan Forgiveness (PSLF) and other federal forgiveness programs

What's next?