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Is student loan refinancing worth it? The pros and cons of changing your loans

With interest rates set to rise, financial experts say it could be a good move to refinance your student loans. But it could disqualify you from loan forgiveness.

CHARLOTTE, N.C. — If you have student loans, it's a pretty confusing time with a lot on the line. And while many borrowers are looking at possible student loan forgiveness, many people are wondering if it's worth it to refinance their loans. 

The big question is with interest rates being low, and an expectation for them to go up in coming months, experts say it's a big gamble. And like any bet, you could win big and save, or lose and pay out more. 

It seems obvious. When interest rates are low, people tend to refinance their homes, so why not student loans, too? Analysts say you could risk losing a lot of money because of potential changes ahead for student loan programs.

Dave Lane still isn't used to his student loan payment, even six years after graduating from dental school. 

"It can be a big shock, a deer in the headlights kind of feel every time that payment is coming out," Lane said. 

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He's working with student loan expert Will Koster to keep a closer eye on all that’s going on with loan programs.

"We’re kind of working on the fly with all these interest rates and forbearance going on," Lane said.

The federal government recently extended the interest-free time to the end of the summer and experts think the extension could actually run until the end of the year, leaving student loan holders with some serious things to consider.

"The big conundrum is that math and emotion don’t always add up," Koster said.

He says the big question is this: Should you refinance your loan with interest rates where they are now?

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"It kind of does seem like a gamble," Koster said. "Do you try to catch when they're the lowest because it's going to go into the same rates? Or do we plan it out and see how long we benefit from the flexibility we gain with the forbearance?"

Perhaps the real gamble is banking on the possibility that the government could give people money toward paying off their loans or even wipe the loans out entirely. 

If you refinance, you likely wouldn’t be able to take advantage of that.

RELATED: Activists keep up pressure as Biden weighs student debt move

"How would that make them feel knowing they may have locked in a lower interest rate but now they're missing out on something else?" Koster said. "And vice versa, if they keep loans federal, nothing ends up happening and they lost the opportunity to refinance at a lower rate, how would they feel about that?"

One thing is for sure. It's a big decision with a lot of moving parts. 

Here are a few links that readers might find informative:

WCNC Charlotte is always asking "where's the money?" If you need help, reach out to WCNC Charlotte by emailing money@wcnc.com.

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