Student loan interest resumes today for nearly 8 million borrowers enrolled in Biden’s SAVE plan. The temporary 0% interest waiver expired August 1, after being quietly applied last year following legal scrutiny of the plan’s funding structure. Borrowers will now see interest pile on top of balances again.
According to the Education Department, “Borrowers should prepare for interest to begin accruing again on August 1, 2025.”
https://www.sfchronicle.com/personal-finance/article/student-loan-save-plan-interest-resumes-20794119.php
The SAVE plan had initially capped payments at 5% of discretionary income and canceled unpaid interest monthly. That benefit is now gone for many. One borrower, quoted by Investopedia, said the change “means I’m going to owe $40 more per month now, and I already budget down to the dollar.”
https://www.investopedia.com/student-loan-interest-resumes-on-the-save-plan-11778571
Roughly 7.7 million borrowers were placed in SAVE, with over 4 million auto-enrolled. Many did not realize the interest pause was temporary. No formal notices were mailed. Some servicers only updated balances last minute, catching borrowers off guard. Legal groups warn the new burden will hit low-income borrowers first, especially those nearing default.
A hidden detail: borrowers in default were excluded from SAVE enrollment altogether. Their balances have quietly grown during the pause.
No new payment delays are expected. Interest starts immediately, whether or not a borrower is ready.
Host: Student loan payments for nearly 8 million borrowers are set to skyrocket starting tomorrow. The Department of Education is set to end a repayment plan known as the SAVE Act. It could be a serious blow to borrowers already struggling to make payments on student loans pic.twitter.com/yZ7DU8PdIC
— FactPost (@factpostnews) July 31, 2025