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Are You Ready for the End of the Student Loan Federal Interest Holiday?

Published December 16, 2021


Student Loan Refinance

Are you ready for the end of the federal student loan payment and interest pause?

Everyone loves a holiday, and the best holiday is one that saves you money! The Federal student loan interest and payment pause began on March 20, 2020, when the federal government suspended loan payments, stopped collecting on defaulted loans, and dropped the interest rate to zero on U.S. Department of Education-owned federal student loans. The temporary relief became law on March 27, 2020 and was scheduled to expire that year on September 20, 2020.

As the pandemic continued, the expiration deadline for student loan relief was extended several times in 2020 and 2021 and is currently scheduled to expire on December 31, 2022.

The payment pause brought some much-needed relief to those holding federal student loan debt, but some borrowers might be wondering how they can prepare for the day when it ends.

What should I do if I hold federal student loan debt?

Here are some steps you can take before the federal student loan pause ends:

  1. Given the administration’s statement, you should take the time between now and the end of December to prepare to resume making your loan payments. It was probably easy to get used to having that extra money each month – are you ready to start making payments again? Ideally, you’re saving for that eventuality right now. If not, think about setting aside some money to help ease the transition back into your normal payment schedule. Check your federal loan balance(s) to determine how much you owe and what your payments will be once the holiday is over. If your income or expenses have changed due to the pandemic, factor that into your monthly budget.
  2. Check the current interest rates and compare them to what you’re paying now. Interest rates are at near historic lows, but the Federal Reserve began increasing rates again in 2022 and is expected to further increase rates in 2023. This is subject to change depending on economic conditions but the trajectory for interest rates appears to be higher from here rather than lower.
  3. If the interest rates currently being offered are attractive, you may re-strategize your current repayment plan and consider refinancing one, some, or all of your federal loans. The chief advantage of refinancing is that you could potentially save a lot of money by locking in a lower interest rate now. The difference of even 0.5% or 1.0% could translate into thousands of dollars of savings over the life of your loan. Other advantages of refinancing include: a single monthly payment on one consolidated loan, paying off your loans faster if you adjust your loan to a shorter term, being able to work with a lender of your choice, and taking advantage of unique perks from private lenders like Laurel Road. With the Laurel Road Linked Checking account, an FDIC-insured1 online checking account, you may get an additional rate discount during refinancing when you open a checking account and set up qualifying monthly direct deposits. This account also has no minimum balance to open and $0 monthly maintenance fees. Remember that many lenders will let you check your rate without affecting your credit score,2 so it may be worth checking your refinancing rate now to compare your options.

The chief disadvantage of refinancing is that you’d lose access to government programs and benefits, like forbearance and income-based repayments. As a reminder, the Federal student loan interest holiday is one of these programs, so you’d be losing access to that, among other federal benefits and programs. For more information on federal student loan repayments, visit www.studentaid.gov/.

If you are considering refinancing your student loans now, you can read more here.

What should you do next?

Whatever you do, it’s a good idea to make sure make sure all your contact and banking info is up-to-date with your loan servicer and save as much money as you can for your future loan payments. All holidays eventually come to an end, and this one will too, so be prepared!


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  1. Deposits are insured up to $250,000. Laurel Road is a brand of KeyBank N.A., Member FDIC. To learn more, contact the FDIC toll-free at 1.877.ASK.FDIC (1.877.275.3342) or visit www.fdic.gov.
  2. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.

In providing this information, neither Laurel Road nor KeyBank nor its affiliates are acting as your agent or is offering any tax, financial, accounting, or legal advice.

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