(Nerdwallet) – Refinancing student loans at a lower interest rate can save you more money. With the imminent reboot in federal student loan bills and refinancing rates approaching all-time lows, now may seem like the perfect time to take this step.

But even if you benefit from refinancing, it won’t always make sense if you have federal student loans – and most borrowers do. Ask yourself the following questions to determine if refinancing now is right for you.

What’s the last on the payment break?

Most federal student loan payments are suspended without interest until January 31. Various members of Congress have proposed several extensions of this forbearance, some of which will last until September, but the long-term fate is currently uncertain.

Until there’s a definitive answer, don’t refinance Federal Student Loans.

Refinancing replaces your existing loans with a new private loan. This loan will not be eligible for federal forbearance. No matter how good a lender’s rate offer is, it will not beat 0% interest.

If your goal is to repay loans quickly, respect the abstention as long as it lasts and make payments directly on your principal balance.

Do you work in the public service?

Public service workers should avoid refinance federal loans.

If you may qualify for an existing forgiveness program, such as the civil service loan forgiveness, keep your government loans. You will usually pay the least overall if you get a loan forgiveness.

Is your job in danger?

Wait to refinance federal loans if you think you might lose your job or see your hours cut in the next few months.

Even if your job seems solid, review all of your financial obligations, like rent and car payments, before you refinance. If your income changes, could you still afford anything?

Federal student loans come with options such as unemployment deferrals and income-based repayment plans. These can help keep payments manageable if your circumstances change.

Are you waiting for the loan to be canceled?

President-elect Joe Biden campaigned to forgive $ 10,000 in federal student debt for every borrower. Some members of Congress want to go further: write off $ 50,000 or all of the student debt.

How should these proposals affect your decision making? Start with what Biden took care of, which seems shorter, and see how much you owe:

  • If it’s $ 10,000 or less. Wait and see what happens; refinancing is not as huge of a money saver if your balance is small. Make the required payments (if any) while you wait to avoid unnecessary interest, late fees, or damage to your credit.
  • If it’s over $ 10,000. Refinance some of your loans, but keep your federal loan balance as close to $ 10,000 as possible. This will maximize your savings on both potential cancellation and refinancing.

If you only have one federal loan, such as a consolidation loan, you may not be able to partially refinance it; ask the lender for their policy. In this case, refinancing will make more sense the larger your balance.

For example, let’s say you owe $ 100,000 at 7% interest. By refinancing at 4%, your monthly bills would go down by $ 149 and you would pay $ 17,836 less overall, assuming a 10-year repayment plan.

If you wait to refinance, you’ll miss out on some of those savings. Compare that to your belief that loan cancellation will happen and the fact that until the details of a program are revealed, no one knows who will get forgiveness – if anyone does.

Do you also have private student loans?

This decision is simpler. Private loans do not qualify for existing government programs and would not qualify for Federal Loan Cancellation.

If you can qualify for a lower interest rate, there is little downside to refinance private student loans.

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Ryan Lane is a writer at NerdWallet. Email: [email protected]

The article Read This Before You Refinance Federal Student Loans originally appeared on NerdWallet.

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