WASHINGTON – Roughly 8 million borrowers whose student loan payments have been on pause for a year will start to see interest accrue on their debt again in August, the U.S. Department of Education said.
Legal challenges have kept the massive group in limbo since June 2024, when former President Joe Biden’s signature student loan repayment plan faced its first blow in court. In the interim, borrowers have been in interest-free forbearance, freed from making payments until at least September 2025, while their debt has been prevented from ballooning.
That hiatus will end on Aug. 1, Trump administration officials said. The change is part of an effort to comply with an injunction issued in April to implement a court order striking down SAVE, they said. The rulings officials cited did not specifically state that the interest-free forbearance status of SAVE borrowers was illegal.
Education Secretary Linda McMahon urged SAVE borrowers to transition quickly to alternate repayment plans.
“For years, the Biden administration used so-called ‘loan forgiveness’ promises to win votes, but federal courts repeatedly ruled that those actions were unlawful,” she said in a statement on July 9. “Congress designed these programs to ensure that borrowers repay their loans, yet the Biden administration tried to illegally force taxpayers to foot the bill instead.”
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The policy shift is the latest in a series of measures by the federal government since President Donald Trump regained the White House aimed at aggressively collecting on federal student loans.
Biden’s Education Department brought student debt relief to millions of Americans while largely showing borrowers leniency as they returned to repayment post-pandemic. President Donald Trump’s Education Department, on the other hand, has moved in recent months to garnish the wages and other benefits of borrowers in default.
The change also comes after President Trump signed a landmark tax and spending bill on July 4 that requires SAVE borrowers to switch to a new repayment plan by July 2028. The courts will likely rule more definitively on SAVE’s future sooner, in the coming months. If borrowers don’t act before July 2028, however, they’ll be automatically enrolled in a new income-based repayment program called the Repayment Assistance Plan, or RAP.
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SAVE based monthly payments, which could be as low as $0, on discretionary income. RAP is different and also less lenient: It bases bills on gross income and requires all borrowers, even those who report no income, to make minimum monthly payments of at least $10.
The Student Borrower Protection Center, an advocacy group, criticized the Trump administration for resuming the interest charges. Mike Pierce, the executive director, estimated the average SAVE borrower could now incur more than $300 a month in interest.
“Every day, we hear from borrowers,” he said in a statement. “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.”
Zachary Schermele is an education reporter for USA TODAY. You can reach him by email at zschermele@usatoday.com. Follow him on X at @ZachSchermele and Bluesky at @zachschermele.bsky.social.
This article originally appeared on USA TODAY: Millions of student loan borrowers will see interest restart
