You know that student loan refinancing could potentially save you hundreds of thousands of dollars. However, not everyone will end up saving that much. The total savings will vary considerably from one borrower to another, depending on each individual’s financial situation. And some borrowers may not save anything at all.

Before you apply for refinancing, it’s important to first calculate how much you could potentially save. This will help you determine whether or not it is worth it.

The easiest way to calculate how much you could save is by using an online student loan refinance calculator.

How Student Loan Refinance Calculators Work

A student loan refinance calculator is an online tool that’s designed to calculate potential savings on refinanced loans. You can use this tool to determine if and when you should refinance your student loans. You can also use it to calculate the monthly payments on your refinanced student loan.

Using a student loan refinance calculator is easy. The interface is user-friendly. The tool will ask for information about your loan balance, current loan, and refinanced loan.

Here’s a look at the terms you’ll come across when using a refinance calculator, and what each term means:

1. Total Student Loan Balance – This refers to the total amount that you have to pay back on all your loans. This includes the principal and accrued interest.
2. Current Monthly Payment Amount – This is the total amount that you owe each month towards your loan repayments.
3. Number of Monthly Payments Left – This depends on your current loan term. To calculate this, multiply your total loan term in years by 12. This will give you the total number of monthly payments you are required to make. Subtract the number of monthly payments you’ve already made from this total. The remainder is the number of monthly payments still outstanding.
4. Current Interest Rate – This refers to the rate you’re paying on your current loan.
5. New Interest Rate – This is the estimated rate that the lender would have quoted when you applied for refinancing. At this point, the lender would have done a soft credit pull and given you an estimated rate only. 
6. Refinance Loan Term – Choose the term length of your loan. 5, 7, 10, 15, and 20 years are common term lengths. Ideally, you should perform separate calculations to see which term length works best for you. 

Using a Refinance Calculator

You know what each term stands for. Now enter in the information in the relevant windows and click submit. The tool will show you the results in a few minutes for your lifetime and monthly savings as well as your new monthly payments.

A student loan refinance calculator is a handy tool for calculating your potential savings on loan refinancing. This will help you make smarter decisions about managing your loans and reducing your debt.