For millions of Americans already feeling the squeeze of rising costs and mounting debt, student loans are about to get even more expensive.
Around eight million borrowers enrolled in the Biden-era SAVE repayment plan are now bracing themselves, as the Department of Education has confirmed it will restart interest charges on August 1.
This change hits hardest for people whose monthly payments were reduced to $0 under SAVE, thanks to their income levels.
And while they won’t have to immediately resume paying down their loans, the interest will quietly begin stacking up again.
Why Is Interest Starting Again?
According to the Department of Education, this wasn’t a voluntary move.
Officials say they’re complying with a federal court order from July 2024, which halted the full rollout of the SAVE plan.
The ruling, handed down by the Eighth Circuit Court of Appeals, forced the department to place millions of borrowers in forbearance—a pause on payments but not on accruing interest.
This legal battle stems from a ruling in February 2024 that determined SAVE was not legally sound, prompting a major shift in federal student loan policy.
Biden’s SAVE Plan and Its Unraveling
The Saving on a Valuable Education (SAVE) Plan, introduced in August 2023 after the Supreme Court blocked Biden’s original forgiveness plan, aimed to help struggling borrowers manage their debt over time.
It promised loan forgiveness after 25 years of regular payments, regardless of how much was owed.
It was also designed to lower monthly payments dramatically—sometimes to $0—based on income.
Now, with SAVE partially dismantled and interest resuming, that long-term relief is slipping further away for many.
Trump Administration Blames the Courts
Education Secretary Linda McMahon, now serving under President Trump, didn’t mince words.
She criticized the Biden administration for making promises the courts later ruled unlawful.
“For years, the Biden Administration used so-called ‘loan forgiveness’ promises to win votes,” McMahon said.
“But federal courts repeatedly ruled those actions were unlawful.
Since day one of the Trump Administration, we’ve focused on strengthening the student loan system and making repayment simpler.”
But not everyone agrees with that assessment.
Borrower Advocates Feel Betrayed
Mike Pierce, who heads the Student Borrower Protection Center, slammed the move.
He accused McMahon and the Trump administration of abandoning vulnerable borrowers.
“Instead of fixing the broken system, she’s choosing to drown people in interest and blaming it on the courts,” he told ABC News.
“We hear from borrowers every day—teachers, nurses, retail workers—who trusted the government.
Now they’re facing surprise bills that could cost hundreds more each month.”
Pierce called the policy reversal a “betrayal”, warning that the damage will only deepen the student debt crisis, which already tops $1.6 trillion.
A Glimpse Into the “Big Beautiful Bill”
This restart in interest comes shortly after President Trump signed the Big Beautiful Bill, a sweeping domestic policy law aimed at reshaping the student loan landscape.
One of the bill’s biggest changes? It slashes the number of repayment options.
Previously, borrowers could choose from about a dozen repayment plans. Now, there are only two:
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A standard repayment plan, with fixed payments based on loan size.
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A new income-driven option called the Repayment Assistance Plan (RAP).
Under RAP, payments are tied to your income.
If you earn between $10,000 and $20,000, you’ll pay just 1% of your income toward your loans.
But if you earn $100,000 or more, you’ll pay 10%.
Who Pays More—and Who Pays Less?
Economist Jason Delisle from the Urban Institute recently broke down the numbers.
Surprisingly, his estimates show that borrowers making between $30,000 and $70,000 may actually pay less under the GOP plan than they would’ve under the Obama-era repayment program.
But some groups—especially low-income borrowers with no income, those earning around $20,000, and those making over $100,000—are likely to face higher monthly costs under the new structure.
Repayment Timelines Will Vary By Loan Size
Under the standard repayment plan, income isn’t considered at all.
Instead, borrowers make fixed payments over a set number of years based on how much they owe:
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Loans under $25,000: paid off over 10 years
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Loans over $100,000: stretched across 25 years
There’s one silver lining—students who borrowed before July 1, 2026, will still have access to the previous range of repayment plans.
These changes apply only to new borrowers after that date.
What’s Next for Borrowers?
For now, SAVE borrowers are still in forbearance, and according to guidance from earlier this year, they won’t be required to make payments until December 2025.
But with interest now back in play, the total balance will grow until that day comes.
Borrower advocates are sounding the alarm, saying this will make loans more expensive in the long run—especially for those already struggling.
And with only two repayment plans left to choose from, options are narrowing.
The Bigger Picture
The student loan debate continues to divide political leaders.
While Biden pushed for broad forgiveness and more accessible relief, Trump’s administration is prioritizing streamlining the system and reining in costs.
Borrowers, meanwhile, are stuck in the middle—waiting for answers, and watching their loan balances grow.
So as interest begins ticking again for millions of SAVE enrollees, one thing is clear: the student loan crisis is far from over.