Student Loan Interest Resumes for SAVE Plan Borrowers: What You Need to Know

Interest Resumption on SAVE Plan

• ⚠️ Interest collection on federal student loans for borrowers in the SAVE plan resumes today.
• 💡 This resumption impacts nearly 7.7 million people enrolled in the SAVE plan as of July.
• 📌 Borrowers were previously in a forbearance where no payments were due and no interest accrued.

Options for SAVE Plan Borrowers

• 📊 Do nothing: Stay in the SAVE plan and let interest accumulate, resulting in a larger loan balance later.
• 💰 Make interest payments: Pay only the accrued interest each month to prevent the balance from growing, with estimated monthly interest around $300.
• 🚀 Switch repayment plans: Consider moving to an Income-Based Repayment (IBR) plan to resume progress toward loan forgiveness timelines.

New Repayment Assistance Plan (RAP)

• 🗓️ A new Repayment Assistance Plan (RAP) will launch in July for new borrowers, replacing existing income-driven plans.
• 📈 RAP calculates payments based on a flat percentage of gross monthly income (1-10%), unlike current plans that use discretionary income.
• ⏳ The forgiveness timeline under RAP is 30 years, compared to 20-25 years for current income-driven plans.