Student Loan Refinance Tax Impact Calculator
Refinancing can cut your rate — but if you're leaving federal loans, you lose IDR, PSLF, and deferment protections. Plus your student loan interest deduction may change.
e.g. 120 for a 10-yr Standard plan, up to 240-360 if on an income-driven plan.
Current Payment
$575New Payment
$530Monthly Savings
$45Interest Deduction Change
−$90
After-Tax Annual Savings
+$520
Refinancing federal loans means losing:
- • Losing IDR income-driven repayment: payments tied to income (including the new RAP plan and IBR)
- • Losing PSLF: public service loan forgiveness after 120 payments
- • Losing federal deferment/forbearance: mandatory relief during economic hardship
- • Losing death/disability discharge: federal loans are discharged upon total disability or death
Student loan refinancing FAQs
Does refinancing federal student loans make them private?
Yes. A private lender pays off the federal loans and issues a new private loan. The new loan is no longer eligible for federal income-driven repayment, Public Service Loan Forgiveness, or federal deferment and discharge protections.
Is interest on a refinanced student loan still deductible?
Interest on a refinanced loan can remain qualified student loan interest when the original debt paid qualified higher-education expenses and the refinance proceeds are used only to refinance that debt. The deduction remains subject to IRS eligibility and MAGI limits.
Should I refinance if the private interest rate is lower?
A lower rate can reduce interest, but the comparison should value federal protections and any realistic forgiveness path. Borrowers pursuing PSLF or needing income-driven payments can lose more in benefits than the rate reduction saves.
Sources
Related Calculators
Student Loan Repayment
Compare RAP, Tiered Standard, IBR, or Standard based on the July 1, 2026 loan-date rules
Student Loan Interest Deduction
$2,500 cap §221 above-the-line, MAGI phase-out $85k-$100k single / $175k-$205k joint
Student Loan Forgiveness Tax Bomb
IDR forgiveness tax liability: ARPA expires 12/31/25 — project your tax bomb and savings plan