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yesterday

Trump Administration Resumes Interest on Defunct SAVE Student Loans

The Department of Education has labeled the SAVE plan defunct, recommending active income-driven enrollment as resumed interest charges drive up borrower balances.

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Overview

  • On August 1, the Trump administration resumed charging interest on federal student loans held in SAVE forbearance.
  • Borrowers in SAVE forbearance are accruing interest without earning credit toward forgiveness programs such as Public Service Loan Forgiveness.
  • The Department of Education is urging former SAVE enrollees to switch into active income-driven repayment plans like Income-Based Repayment.
  • Under President Trump’s One Big Beautiful Bill, borrowers remaining in SAVE forbearance will be automatically moved into the Repayment Assistance Plan by July 1, 2028.
  • Some borrowers may use the forbearance pause to pay down higher-interest debt, but experts generally recommend transitioning sooner into a viable income-driven plan.