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Student loan interest comes back

2 1
10.07.2025
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The Big Story

Student borrowers face interest accrual again

The Education Department announced Wednesday interest accrual for student loan borrowers on the Saving on Valuable Education (SAVE) plan will restart Aug. 1.

© Greg Nash

The SAVE plan, created under the Biden administration, was struck down by the 8th U.S. Circuit Court of Appeals.

Since the ruling, millions of borrowers have remained in forbearance with no interest accrual, with the possibility this forbearance could last until summer 2026 before borrowers were forced to switch out.

“Millions of borrowers enrolled in the Biden Administration’s SAVE Plan based on the false promise of loan cancellation and zero monthly payments, despite multiple federal courts striking down such policies. The Biden Administration also invented a zero percent ‘litigation forbearance,’ forcing taxpayers to foot the bill and leaving borrowers without clear direction on how to legally repay their loans,” the press release from the department states.

The SAVE plan became a popular option for its ability to offer some borrowers monthly payments as low as $0.

While borrowers will not be responsible for making payments on the SAVE plan until forbearance ends, their balance will rise with the restart of interest accrual.

The Education Department is urging these borrowers to choose a new repayment plan before restarting payments.

The Hill's Lexi Lonas Cochran has more here.

 

Welcome to The Hill’s Business & Economy newsletter, I'm Aris Folley — covering the intersection of Wall Street and Pennsylvania Avenue.

 

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