Here's how you can save thousands of dollars by refinancing your student loans

One way to save money on paying back your pesky student loan debt is to refinance — swapping in your current student loans for a new, consolidated one with a lower interest rate and different repayment term.

Below, CNBC Select crunched some numbers and average student loan figures to figure out just how great those savings can be.

Before seeing how much refinancing can save you, you have to understand how much you'd be paying without it. To illustrate this, we use the below-average student loan figures.

• Student loan balance: $37,853; this is the average federal student loan debt per borrower
• Repayment term: 10 years, or 120 months; this is the standard repayment plan for federal student loans
• Interest rate: 4.21% APR; this is the 10-year average federal student loan interest rate for undergraduates
• Monthly student loan payment: $387.03; we estimated using Bankrate's student loan calculator

Using the above figures, after your 10-year loan term is up, you'd end up paying a whopping total of $46,443.90, with $8,590.90 of that amount being interest.

Say, however, that you refinance this amount today, opting for a shorter repayment term of just five years. Student loan refinance rates are often in ranges that vary by lender and your credit score. For the sake of this example, we'll use the lower end of what lenders are currently offering, a fixed 3.99% APR. Your new monthly payment would go up to $696.95 (since you're cutting your loan term in half) but you'd end up paying just $3,963.99 in interest alone — a savings of $4,626.91.

If you instead choose to stay with the same repayment term of 10 years, but at the same refinanced rate of a fixed 3.99% APR, your new monthly payment would drop a little to $383.06. Over the course of the 10 years, you'd pay $8,114.60 in interest alone — a savings of $476.30 than if you didn't refinance at all.

If you decide you want to refinance with a private lender, look for one without application or origination fees, as well as no prepayment penalties. This way, you're likely to see the most savings from refinancing.

SoFi® Private Student Loan Refinancing offers some of the lowest refinancing rates on the market, along with zero fees whatsoever.

To see how much you could potentially save by refinancing your student loans, use a student loan refinance calculator. You'll enter your current monthly payment, remaining balance and loan term, current interest rate, plus your new interest rate and new loan term. Feel free to test different loan terms (5, 7, 10, 15, 20 years) to see whether a shorter or longer repayment term works better for your financial situation.

ELFI offers refinancing loan terms ranging from five to 20 years, giving you flexibility in how large you want your monthly payment to be. And, according to ELFI's website, customers save an average of $278 per month when refinancing and an average of $20,774 over a lifetime.

Given the current rate environment, where interest rates are dropping, now can be a good time to refinance your student loans. Those who have good credit have the best chance at scoring the lowest refinanced rate possible.

For federal student loan borrowers specifically, keep in mind that refinancing with a private lender means giving up access to any government protections, such as income-driven repayment plans and student loan forgiveness programs. If you think you'll need assistance, check to see what protections private lenders offer as you shop around.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every student loan article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of student loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

Catch up on CNBC Select's in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.

Fixed rates range from 4.49% APR to 10.99% APR with 0.25% autopay discount and 0.125% SoFi Plus discount. Variable rates range from 5.74% APR to 10.99% APR with 0.25% autopay discount and 0.125% SoFi Plus discount. Unless required to be lower to comply with applicable law, Variable Interest rates will never exceed 13.95% (the maximum rate for these loans). SoFi rate ranges are current as of 9/23/26 and are subject to change at any time. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. You may pay more interest over the life of the loan if you refinance with an extended term.