Student Loan Alert! SAVE Plan interest resumes: Starting August 1, 2025, interest will accrue again on federal student loans for borrowers in the SAVE (Saving on a Valuable Education) plan.
The Department of Education cites a federal court injunction that halted the full implementation of the SAVE plan, including the provision for a zero percent interest rate status. Borrowers in the SAVE Plan will see their loan balances grow when interest starts accruing on August 1, 2025. When the SAVE Plan forbearance ends, borrowers will be responsible for making monthly payments that include accrued interest and the principal amounts.
According to Federal Student Aid data, just under 2 million borrowers were enrolled in IBR as of the second quarter of 2025. The Department of Education has updated its guidance on student-loan forgiveness for borrowers on income-based repayment plans, which give enrolled borrowers monthly payments based on their income and family size, with the promise of forgiveness after 20 or 25 years.
Image by Peggy und Marco Lachmann-Anke from Pixabay
Review Options and Plans
Borrowers on SAVE should review options: If you’re on the SAVE plan, you may receive an email from Federal Student Aid about the interest restart. To compare available repayment plans, borrowers with loans in the SAVE Plan can use the Loan Simulator to estimate monthly payments under optional repayment plans, determine repayment eligibility, and learn which option best meets their repayment goals.
Borrowers who previously submitted an IDR application and selected the Income-Based Repayment, Pay As You Earn (PAYE), or Income-Contingent Repayment (ICR) Plan do not need to submit a new application. SAVE Plan borrowers working toward legal loan discharges, such as through the Public Service Loan Forgiveness Program, must switch out of the SAVE Plan to an alternative IDR repayment plan to start making qualifying payments.
What’s Ahead
- New loan limits and repayment plans for future borrowers: A new law, effective for loans disbursed beginning July 1, 2026, will introduce significant changes for future borrowers, including:
- New borrowing limits: Stricter lifetime and annual borrowing caps will be imposed, especially for graduate and Parent PLUS loans.
- Revised repayment structure: Two primary repayment plans, a standard plan and a new Repayment Assistance Plan (RAP), will replace the current complex array of income-driven options. The RAP features income-based payments and an interest subsidy to prevent balances from growing, though the forgiveness timeline extends to 30 years.
- PSLF has been paused. IBR forgiveness has been paused due to “system updates” per the Department of Education website. Public Service Loan Forgiveness (PSLF) will be fully available under the new legislation, allowing eligible public service workers to have their remaining loan balances forgiven after 120 qualifying payments.
- Department of Education quietly updated its guidance on student-loan forgiveness for borrowers on income-based repayment plans, which give enrolled borrowers monthly payments based on their income and family size with the promise of forgiveness after 20 or 25 years.
- According to Federal Student Aid data, just under 2 million borrowers were enrolled in IBR as of the second quarter of 2025.
Important note: The SAVE plan and IBR forgiveness status remains dynamic due to ongoing legal challenges and system updates. The information above reflects the most current available details as of late July 2025. It’s crucial to consult official sources like The Federal Student Aid Office and your loan servicer for the latest information and guidance.
Image by Peggy und Marco Lachmann-Anke from Pixabay
Change is a Constant
Student loan debt is a big deal for so many. EducationData.org cites the statistics by age of those holding student loan debt.
Report Highlights. Borrowers aged 50 to 61 years have the highest average outstanding student loan debt at $46,790 per borrower.
- Borrowers under 40 owe 54.5% of all student loan debt, totaling $869.02 billion.
- 25% of adults aged 18 to 29 years have student loan debt, making them more likely than adults in any other age group to have student debt.
- Student borrowers aged 30 to 39 years owe 32.5% of the national student loan debt balance or $517.45 billion.
One thing is certain: change is a constant. This can be a blessing and a curse 🤷🏻♀️It’s great when you change your mind and want to update something. It’s something else when you’ve planned and it is changed for you.
There have been numerous updates and changes made for us of late. It’s hard to keep up and keep track. Because my work involves various ages, these weekly blogs are written with young adults to seniors in mind. Please feel free to reach out directly with specific topics of interest to you. Researching and digging deep is fun for me 🌞
Send me an Email or Book a Time with Lynn if you’d like to Zoon connect. For additional information about my work, check out @ The Living Planner or @ The Living Planner.
If you’re up for planning your life’s administrative side, my book is a resource. The Living Planner What to Prepare Now While You Are Living © Check it out HERE.
Quote for the week: “You can have a plan, but you have to be flexible. Every day is unpredictable, and you just have to go with the flow.” –Jane Krakowski
Flexibility is powerful! Lynn
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