Overview

• The Department of Education applied interest on SAVE plan loans on August 1, ending the zero-interest forbearance that paused balances since courts blocked key provisions last year.
• Typical monthly payments for enrolled borrowers could rise by roughly $300 as accrued interest resumes on about $1.7 trillion in outstanding student debt.
• Education Secretary Linda McMahon has labeled the SAVE plan illegal and urged borrowers to switch to legally compliant repayment options.
• The department faces about 1.5 million pending applications from borrowers seeking to move into alternative income-driven plans as guidance remains unclear.
• Experts warn that renewed interest charges combined with processing delays may further inflate loan balances, potentially postponing homeownership and family formation for many.