Interest Resumes for SAVE Borrowers Amid Court Ruling

The U.S. Department of Education announced that interest will resume accruing on August 1 for nearly eight million borrowers enrolled in the Biden-era Saving on a Valuable Education (SAVE) repayment plan, after a court order deemed the plan illegal. While interest will begin accruing, payments will remain paused for the time being, but borrowers are warned that balances will rise. The Department is urging borrowers to switch to alternative repayment plans, such as Income-Based Repayment (IBR) or the Repayment Assistance Plan (RAP). Recent legislation eliminates SAVE and other income-driven options for loans issued after July 1, 2026, requiring all borrowers to transition to other plans by 2028. Critics argue that the administration's actions overstepped its authority and misled borrowers about the program's durability. The Education Department plans to assist borrowers in adapting to the new requirements.