calculate-loan

01 Loan payments

Refinance a Personal Loan Into a Student Loan?

Calculator No. 01-8017 · Updated · Formula and assumptions shown below

Monthly payment $405.53
Total interest
$4,331.67
= Monthly payment × loan term × 12 − loan amount
Loan amount
$20,000
Input
Interest rate (APR)
8 %
Input
You enter
Loan amount ($), Interest rate (APR) (%), Loan term (years)
You get
Monthly payment ($), Total interest ($)
Rounding
2 dp

Estimate for education, not financial advice. The result follows from the numbers you enter and the formula shown. It is not a quote or an offer, and it does not include fees, taxes or insurance unless the calculator asks for them. Ask your lender for the exact figures.

You generally cannot convert an existing personal loan into a student loan by refinancing it: student-loan refinancing usually replaces eligible education debt, not unrelated personal debt. The calculator below estimates payments and total interest for a fixed-rate loan, so you can compare the personal loan’s remaining balance with any financing offer using figures supplied by the lender.

Formula

The calculator uses the standard fixed-payment amortization formula. Monthly payment equals the loan principal multiplied by the monthly interest rate, divided by one minus the quantity one plus the monthly rate raised to the negative number of monthly payments:

PMT = P × r / [1 − (1 + r)^−n]

  • P is the amount borrowed, in dollars.
  • APR is the annual percentage rate entered as a percentage.
  • r is the monthly rate, calculated as APR ÷ 1,200.
  • n is the number of monthly payments, calculated as years × 12.
  • PMT is the monthly payment, rounded to the nearest cent.

Total interest is estimated as the rounded monthly payment multiplied by the number of payments, minus the original principal: Interest = PMT × n − P. This simplified total assumes the rounded payment is made for every month and does not account for lender-specific rounding or a final adjusted payment.

Worked Example

Using the calculator’s default values—$20,000 principal, 8% APR, and a five-year term—the monthly rate is 0.08 ÷ 12, or 0.0066667, and there are 5 × 12 = 60 payments.

PMT = 20,000 × 0.0066667 ÷ [1 − (1.0066667)^−60] = $405.53

Total interest = $405.53 × 60 − $20,000 = $4,331.80

The payment is rounded to cents before calculating interest, as it is in the calculator. Actual payment schedules can differ slightly because lenders may calculate interest or adjust the final payment differently.

Assumptions

  • The interest rate is fixed for the entire term.
  • Payments are equal, made monthly, and begin one month after the loan starts.
  • Interest compounds monthly at APR ÷ 12.
  • Fees, taxes, insurance, and other charges are not included.

Why a Personal Loan Usually Cannot Become Student Debt

Refinancing generally means taking out a new loan to pay off an existing one. A student-loan refinance is typically designed for loans originally used to pay education costs. A personal loan used for another purpose does not become education debt just because the borrower is a student, or because the proceeds were later used for school.

Some lenders may allow a personal loan to cover education expenses, but that does not automatically make it eligible for student-loan refinancing. Eligibility depends on the new lender’s own terms and how it classifies the original debt. Do not assume that a loan can be reclassified after it has been taken out. Ask the prospective lender directly whether the specific personal loan is eligible, and get the answer and any conditions in writing.

How to Compare the Existing Loan and a New Offer

Compare the remaining cost of the personal loan with the full cost of the proposed replacement, not just the advertised monthly payment. A longer term can lower the monthly payment while increasing the total interest paid. A lower payment can also result from a smaller balance, an introductory rate, or a term that extends repayment.

  • Request the personal loan’s current payoff amount and remaining payment schedule.
  • Ask for the new loan’s APR, term, payment, fees, and total amount repaid.
  • Check whether the proposed lender will pay the current lender directly or whether you must manage payoff.
  • Compare total remaining payments under the current loan with all payments and fees under the replacement.
  • Confirm whether the offered rate is fixed or variable, and how a variable rate could change payments.

For example, suppose a borrower owes $8,000 on a personal loan with 24 payments remaining. A new offer showing a lower monthly payment over 48 months might still cost more in total because the balance accrues interest for longer. Use the calculator with the payoff amount and offered terms as an estimate, then account separately for disclosed charges and the old loan’s actual payment schedule.

Costs, Risks, and Other Ways to Handle the Debt

Refinancing can involve origination or other charges, and a replacement loan may have different repayment conditions. A longer payoff period keeps the debt outstanding for more time. If the new offer has a variable rate, future payment amounts may change according to its terms. A personal loan may also have different protections or flexibility from a student loan; compare the written agreements rather than relying on the loan category alone.

Alternatives depend on the reason the payment is difficult or the debt needs attention. You could ask the current lender about its available payment options, review whether extra payments are permitted and how they are applied, or consider a repayment plan based on the existing contract. If the original borrowing was for education, check the loan documents and contact the servicer to establish what type of loan it is. Program eligibility and borrower protections are not calculated here; verify details with the relevant servicer or program.

Frequently Asked Questions

Can I refinance a personal loan into a student loan?
Usually, not as a direct conversion. A student-loan refinance generally requires eligible education debt, and a personal loan used for other purposes may not qualify. Ask the prospective lender about the particular debt.

What if I used my personal loan to pay tuition?
Using the money for school does not necessarily change the loan’s classification or make it eligible for student-loan refinancing. Eligibility depends on the lender’s requirements and the loan’s documentation.

Can I use a student loan to pay off a personal loan?
Do not assume so. Education-loan proceeds are generally subject to restrictions on permitted uses, and refinancing rules differ. Check the loan terms and ask the servicer or lender before using funds to repay other debt.

Does a lower monthly payment mean I will pay less overall?
No. A longer repayment term can reduce each payment but increase total interest. Compare the complete payment schedule and disclosed charges.

What figures should I use in the calculator?
Enter the relevant loan balance, the lender-provided APR, and the repayment term in years. For an existing loan, use its actual remaining balance and remaining term when estimating future payments; for an offer, use the proposed amount and term.

The result is an estimate, and the lender’s disclosure gives the exact figures.

Related

Formula used
in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2

Each line is one input (in, sel, list) or one result (out: label, unit, formula, decimals). How the calculators work

Method: the standard loan formula for this calculation, fixed rate and monthly compounding unless stated, rounded as each result states. Not financial advice; no lender, rate or product is recommended. See formulas and assumptions, the disclaimer or report an error.

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