Interest charges will restart for borrowers in SAVE forbearance (Student Borrower Protection Center)

 

Student Borrower Protection Center’s research partners are conducting a groundbreaking research study that aims to understand how Income-Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF) programs impact borrowers’ well-being. If you are currently in an IDR plan, working towards PSLF, or your loans have been cancelled through PSLF, please consider participating below (Password: REPAYE). Participate in Survey   Dahn, The Biden Administration’s Saving on a Valuable Education (SAVE) repayment plan promised to lower monthly student loan payments for millions of Americans. But legal attacks by the same conservative state attorneys general who exploited the courts to block President Biden’s original student debt relief plan resulted in a court injunction that has blocked borrowers from enrolling. Thus, borrowers have been trapped in a year-long, interest-free forbearance while their unprocessed Income-Driven Repayment (IDR) applications wait in limbo. But now, Trump and Education Secretary McMahon are saddling these borrowers with interest. Last week, the U.S. Department of Education (ED) announced that it will begin restarting student loan interest charges on August 1, 2025, for the nearly 8 MILLION borrowers stuck in this forbearance. McMahon voluntarily chose to do this—there was no state or federal court order forcing her hand. Read our Executive Director Mike Pierce’s statement on this below:   “Instead of fixing the broken student loan system, Secretary McMahon is choosing to drown millions of people in unnecessary interest charges and blaming unrelated court cases for her own mismanagement. Every day, we hear from borrowers waiting on hold with their servicer for hours, begging the government to let them out of this forbearance, and help them get back on track—instead, McMahon is choosing to jack up the cost of their student debt without giving them a way out. These are teachers, nurses, and retail workers who trusted the government’s word, only to get sucker-punched by bills that will now cost them hundreds more every month. McMahon is turning a lifeline into a trap and fueling one of the biggest wealth grabs from working families in modern history. It’s a betrayal.”   Read the Full Statement In response to this announcement, we released a new analysis of this policy change, projecting that the typical SAVE borrower will be forced to pay more than $3,500 per year—or $300 per month—in unnecessary interest charges. In total, we found that affected borrowers will be charged more than $27 BILLION in interest over the next 12 months. Read Our Analysis Borrowers have suffered long enough because of the broken student loan system. Despite promises to lower costs for working families, Trump and his allies have only raised them more. Eliminating SAVE and replacing it with the Repayment Assistance Plan (RAP) created by Congressional Republicans means the typical student loan borrower will see their annual student loan costs skyrocket by $2,900—and millions of other borrowers will see their monthly loan bills increase by 50 percent. In fact, they will pay more for longer. RAP forces borrowers to pay for 30 years instead of the 20-25 year timelines of current IDR plans. And now, the Trump Administration wants to pile $27 billion dollars of interest charges over the next 12 months onto struggling borrowers. But McMahon can’t hide from her decision to drown borrowers in interest charges. We’ve been busy sounding the alarm of her policy choice in widespread coverage: Washington Post: Trump Ends Interest Subsidy for Biden’s Student Loan Repayment Plan MarketWatch: Millions of Americans are about to see their student loans accrue interest again. Here’s what to know. Daily Mail: Millions of Student Loan Borrowers to Be Hit With Crippling Interest Charges as Trump Ends Biden-Era Pause New York Times: 8 Million Federal Student Loan Borrowers Will Soon See Interest Restart Newsweek: Student Loan Update: Interest Payments Expected To Jump Thousands The attacks on borrowers and working families must end. Borrowers deserve justice—not retaliation to the tune of billions of dollars in unnecessary, harmful debt. In solidarity, Brandon Herrera Communications and Digital Strategist Student Borrower Protection Center