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yesterday

Interest Resumes for 8 Million SAVE Borrowers as Payments Remain Paused

Facing accruing interest costs of roughly $300 per month, borrowers must choose between lingering forbearance or transitioning to alternative plans that face significant application backlogs.

Bronte Remsik
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Overview

  • On August 1, 2025, the Department of Education restarted interest charges for nearly 8 million enrollees in the Biden-era SAVE income-driven repayment plan after a yearlong zero-interest pause.
  • Although mandatory payments remain suspended under a court injunction, average monthly costs are projected to rise by about $300, causing balances to grow even without required repayments.
  • Education Secretary Linda McMahon has labeled the SAVE plan illegal and urged borrowers to switch into legally compliant income-driven plans to prevent further balance inflation.
  • A backlog of approximately 1.5 million repayment-plan applications is delaying transitions to current options like Income-Based Repayment and the forthcoming Repayment Assistance Plan.
  • Under the One Big Beautiful Bill Act, the new Repayment Assistance Plan will launch on July 1, 2026, and the SAVE program will be officially repealed on July 1, 2028, obliging remaining enrollees to adopt other repayment options.