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6d ago

Education Department to Restart Interest on SAVE Plan Loans

It has told affected borrowers to switch into other federal income-driven options to avoid mounting interest costs.

Almost 8 million federal student loan borrowers will soon see interest accruing on their debt again.
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Overview

  • The Department confirmed interest accrual for loans in the now-invalidated SAVE plan will resume on August 1 after a year-long forbearance.
  • The forbearance followed a June 2024 8th Circuit injunction that paused payments and halted interest without counting toward forgiveness.
  • Last week’s legislation signed by President Trump repealed the SAVE, PAYE and ICR income-driven repayment programs.
  • Borrowers will see their balances grow as interest charges start accruing again, and time in forbearance won’t count toward loan discharge.
  • Secretary of Education Linda McMahon directed borrowers to move to legally compliant plans such as Income-Based Repayment, while advocates warn of renewed financial strain.