Under the federal Coronavirus Aid, Relief and Economic Security (CARES) Act, student loan payments and interest have been paused through September 30. But many qualified borrowers with private student loan debt are taking advantage of low interest rates, according to an analysis by Credible an online loan marketplace..

According to an analysis of more than 17,000 student loans refinanced as part of the Credible marketplace, rates in June on 10-year fixed-rate loans averaged 4.48%, down 26% from a peak of 6.05% in July 2018. Also, rates on five-year, variable-rate loans averaged 2.95%, down 37% from a September 2018 high of 4.68%.

The analysis estimated that a borrower repaying the average graduate school debt of $84,300 over 10 years at 6.22% interest — the average student loan interest rate for grad school loans in recent years — could save $22,656 by refinancing into a five-year variable-rate loan and $8,686 by refinancing into a 10-year fixed-rate loan, Credible noted.

The low rates, Credible explained, are a result of the Federal Reserve cutting short-term interest rates to close to zero to encourage borrowing and stimulate the economy. The Fed is also buying up trillions of dollars in Treasury notes and mortgage bonds, which has helped push Treasury yields and mortgage rates to record lows this summer.

Should the interest waiver on federal student loans expire as scheduled at the end of September, Credible said it will again make sense for borrowers to explore refinancing high-interest-rate loans such as the parent loan for undergraduate students (PLUS loans), which are also available to graduate or professional students.

But Credible cautions that if you refinance federal loans with a private lender, you would give  up access to federal borrower benefits, such as access to income-driven repayment loans (IDR) with potential loan forgiveness after 10, 20, or 25 years of payments. An IDR repayment plan sets your monthly student loan payment at an amount intended to be affordable based on your income and family size.

Further, Credible noted that it is possible that Congress may approve additional relief for federal loan borrowers, including loan forgiveness. If you refinance federal student loans with a private student lender, those loans will not qualify for relief targeted to federal student loans, Credible said.

Another option available to federal student loan borrowers who want to lower their monthly payment is federal loan consolidation. Credible noted that borrowers can qualify for federal student loan consolidation regardless of their credit score. The downside, however, is your overall repayment costs may increase because you do not get a lower interest rate.