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Education Department to Restart SAVE Plan Interest for 8 Million Borrowers

Education officials say court orders require the agency to end the zero-interest pause on SAVE loans.

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.
Education Secretary Linda McMahon testifies at a Senate hearing in Washington, DC, on June 3, 2025.
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.

Overview

  • Approximately 7.7 million borrowers in the SAVE plan will see interest begin accruing on August 1 after a yearlong zero-interest forbearance.
  • The injunction issued by a federal appeals court in April blocked core provisions of the plan, prompting the department to resume interest accrual.
  • Secretary Linda McMahon urged borrowers to switch to legally compliant options like Income-Based Repayment while the department addresses a backlog of 1.5 million pending applications.
  • The Student Borrower Protection Center disputes any court mandate to restart interest and warns the change could add about $3,500 in annual costs for the average borrower.
  • Legislation signed July 4 repealed SAVE, PAYE, and ICR plans and set a deadline of July 2028 to implement a new Repayment Assistance Plan.