When President Biden announced in early April that the pause on federal student loan repayment has been extended to September 1, those of us who have been shouldering the burden of debt from higher education let out a colossal, collective sigh of relief. And while we’ll have a few more months to save up to pay down our debt, there’s another economic force at large that’s now dwindling our wallets: inflation.

The prices of goods and services climbed 8.5% at the end of March, according to the Bureau of Labor Statistics (BLS) Consumer Price Index, the sharpest 12-month increase in the last 40 years. Pretty concerning, no doubt. Inflation not only impacts consumer goods, making everything from our restaurant bills to the cost of a pair of shoes more pricey, but it can also impact the interest rates we’re paying on our loans.

How inflation can impact student loan debt
First, the good news: If you already took out federal student loans, the interest rates on those are fixed, which means the interest rate doesn’t change during the life of the loan, says Jared Andreoli, a certified financial planner, certified student loan planner, and founder of Milwaukee-based Simplicity Financial. So no matter what economic conditions are brewing, or the future increase in interest rates on different types of loans, you’ll be paying the same amount (principal plus interest) each month during the stint of the loan.
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