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Education Department to Restart Interest on SAVE Student Loans August 1

Borrowers have only weeks to transfer into valid repayment plans before interest automatically accrues on SAVE balances

Audience members hold signs behind veteran and student loan borrower Bonni Snider as she testifies during a special forum on the rising cost of education at the Dirksen Senate Office Building on May 14, 2025 in Washington, DC.
Graduation students, faculty, and family gather in front of the statue of John Harvard in Harvard Yard on May 28, 2025 in Cambridge, Massachusetts.
Almost 8 million federal student loan borrowers will soon see interest accruing on their debt again.
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Overview

  • The Department of Education will resume interest accrual on loans in the Saving on a Valuable Education plan starting August 1, affecting about 7.7 million to 8 million borrowers still in forbearance.
  • Affected borrowers will not need to resume monthly payments until their current forbearance ends but will see their loan balances grow as interest accrues.
  • Education Secretary Linda McMahon urged SAVE participants to swiftly enroll in Income-Based Repayment or other approved plans despite a backlog of 1.5 million pending applications at the department.
  • The department says a February appeals court injunction broadening the block on SAVE’s zero-interest status requires restarting interest, a claim the Student Borrower Protection Center disputes as unsupported by any court order.
  • Advocates warn that borrowers could incur roughly $3,500 in extra interest per year and that time in SAVE forbearance will not count toward Public Service Loan Forgiveness or income-driven repayment forgiveness.