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4d ago

Education Department Will Restart Interest Accrual on SAVE Plan Loans on August 1

The Education Department is urging borrowers to switch plans ahead of the change to align with recent legislation that overhauls income-driven repayment by 2028.

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 charging interest on roughly 8 million SAVE loans on August 1, ending a yearlong pause that halted accrual but did not count toward forgiveness.
  • Congress abolished the SAVE, PAYE and ICR plans on July 4 and mandated a shift to only a standard repayment plan and a new Repayment Assistance Plan by 2028.
  • The Education Department is recommending moves to Income-Based Repayment, Pay As You Earn or Income-Contingent Repayment due to service delays in processing plan changes.
  • An advocacy group projects that typical SAVE borrowers will face an additional $3,500 in interest charges per year once accrual resumes.
  • Critics note no court order explicitly requires interest resumption and argue the department’s decision contradicts prior assurances to borrowers.