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

Interest Resumption on SAVE Plan Loans

• 🎯 Starting August 1st, the Department of Education has resumed charging interest on federal student loans enrolled in the SAVE plan.
• 💡 This change impacts nearly 7.7 million borrowers who had their loans in forbearance with a 0% interest rate.
• ⚠️ Borrowers will see their loan balances grow due to the accrued interest.

SAVE Plan and Forbearance Details

• 🚀 The SAVE plan, launched in 2023, was promoted as the most affordable repayment plan.
• ⛓️ Due to legal challenges, borrowers in the SAVE plan were placed in forbearance with no interest accruing, which meant months did not count towards forgiveness.
• 📌 As of August 1st, while interest is now being charged, no payments are immediately required for SAVE plan borrowers.

Options and Next Steps for Borrowers

• 📊 Experts recommend using an online loan simulator to estimate monthly payments under different repayment plans.
• 🔑 For those who can afford it and want to accrue months towards forgiveness, switching to an income-based repayment (IBR) plan is advised.
• ⏳ If unable to afford payments, borrowers can remain on the SAVE forbearance until they are required to make payments.

Borrower Concerns and Expert Advice

• 😥 Many borrowers, like Dan Hurst, feel the rug has been pulled out from under them, as the SAVE plan was a perceived lifeline.
• ⚖️ Christy Aravich, founder of Aravich Law, emphasizes that while balances will grow, decisions need to be made regarding repayment strategies.
• 🗣️ Hurst hopes lawmakers will recognize that most borrowers needing assistance are working individuals, not simply being lazy.