Interest will resume on SAVE Plan loans on August 1, 2025—here’s what it means and what to do

By Kaydee Ambas, CFEI® | Published on October 21, 2025

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If you're currently enrolled in the SAVE Plan and also currently in forbearance due to the ongoing court battle, here’s the latest update: interest will start accruing again on your loans beginning August 1, 2025.

Although borrowers aren’t currently required to make payments, and balances have been frozen at 0% interest, that relief is ending. Interest won’t be applied retroactively, but will start to be added going forward.

Let’s break down what’s changing, how it impacts your student loan balance, and what to do next.

What’s new?

• Interest will resume on August 1, 2025 for borrowers currently in SAVE’s litigation-related forbearance
• This change comes from a court decision that blocked parts of the SAVE Plan—including the 0% interest feature
• While no back interest will be added, loan balances will start growing again beginning on August 1
• The Department of Education is urging borrowers to switch to a different income-driven repayment plan like Income-Based Repayment (IBR) to resume progress toward forgiveness and avoid ballooning balances. Borrowers previously approved for IBR, PAYE, or ICR don’t need to reapply

How it impacts borrowers

For now, your loans may still feel “on hold”—you’re not being billed, and no interest is accruing. But that changes in August.

Balances will start growing

Without payments or interest, your loan may have felt stable. But come August, interest will begin compounding again, which can quickly increase your total balance—especially for those with large loans or longer payoff horizons. What feels manageable now could become more expensive over time.

Budgets could get tighter

Switching from the SAVE Plan to another income-driven plan like IBR might mean higher monthly payments than you’ve seen before. That’s a tough adjustment, particularly for borrowers early in their careers or managing other financial priorities.

Plan options are shifting

Some repayment plans—like PAYE and ICR—are being phased out by 2028. That puts pressure on borrowers to understand which plans are still available, which align with their goals, and when to make a switch. The decision-making window is shrinking, and the options are evolving.

Inaction carries consequences

As enforcement ramps back up, borrowers who remain in limbo risk falling behind. Defaults can trigger wage garnishment, tax refund seizure, or loss of federal benefits—with lasting impacts on credit and income. It’s important to understand your current status and take proactive steps now to avoid these outcomes.

What should I do?

If you’re pursuing Public Service Loan Forgiveness (PSLF)

• Act now: You must switch to a plan like the Income-Based Repayment Plan to start earning qualifying months.
• Time in SAVE’s general forbearance doesn’t count toward PSLF—even if you’re still technically “in repayment.”

If you're in SAVE and not pursuing PSLF

• Expect interest to resume in August—your balance will start to grow unless you act.
• Consider switching to a different repayment plan. Use the Loan Simulator to compare plans based on your income and forgiveness goals.
• The Education Department urges SAVE borrowers to consider enrolling in the Income-Based Repayment Plan authorized under the Higher Education Act until the Department can launch the Repayment Assistance Plan in 2026.

If you’re looking to pay off your loans faster, consider refinancing

Refinancing could help you lock in a lower rate and faster payoff—especially if federal options stay uncertain. If you’re not pursuing forgiveness, now may be the right time to compare refinance rates.

Here’s why it could make sense:

• Avoid rising balances: Interest will start adding to your loan again on August 1, 2025. If you’re not getting forgiveness benefits, that extra interest just means more to repay.
• Lower your interest rate: Refinancing may reduce your rate, which can save you money over time—especially if you’ve improved your credit or income since you first borrowed.
• Fast and easy process: With Earnest, you can check your rate in minutes with no commitment or impact to your credit score.
• Flexible repayment options: You can customize your loan term to fit your budget and timeline.

Timelines to watch

• Now: Borrowers can switch to IBR or other legal IDR plans.
• August 1, 2025: Interest begins accruing again on SAVE forbearance loans.
• By July 1, 2026: The Department will roll out a new Repayment Assistance Plan (RAP) to replace some older plans.

Your next steps

• Don’t wait for a bill to act—switching to IBR now protects your PSLF progress.
• Use available tools: StudentAid.gov Loan Simulator or your loan servicer can help you find the best plan.
• Consider refinancing if you’re not pursuing forgiveness and want a lower rate.

The bottom line

The SAVE Plan remains in limbo—but starting August 1, 2025, your loan will no longer be interest-free. If you're still in forbearance, that means bigger balances and no forgiveness progress.

Taking action now—whether by switching repayment plans or exploring refinancing—can help you avoid growing costs and stay on track for your goals.