Millions face $300 monthly hike as SAVE Student Loan interest resumes in August
The U.S.
Department of Education
has resumed interest charges, which may increase monthly costs by about $300. Millions of Americans are now reviewing their repayment options to manage the financial impact.
Interest Pause Ends in August
In 2023, the
SAVE plan
was introduced to help student loan borrowers manage payments. It included a pause on interest accumulation. However, two court rulings in 2024 halted the plan, and borrowers were shifted into a zero-interest forbearance.
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On July 9, 2025, the Department of Education confirmed that the interest pause would end. Interest started accumulating again on August 1, 2025.
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Monthly Payments Could Rise by $300
With interest charges reinstated, borrowers could now see an average increase of $300 in their monthly payments. According to the Student Borrower Protection Center, this equates to about $3,500 per year in interest for those on the SAVE plan.
Bethany Hubert from Earnest explained that remaining in forbearance is still an option, but interest will continue to grow. Borrowers who delay payments might see their balances increase quickly.
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Forbearance Continues, But Interest Builds
The SAVE plan forbearance allows borrowers to delay payments, but interest will now accumulate. Experts warn that avoiding payments may lead to higher overall loan costs in the future.
Hubert advised that borrowers consider paying at least the monthly interest to avoid balance growth.
Switching Repayment Plans Is Possible
Betsy Mayotte from The Institute of Student Loan Advisors suggested some borrowers may benefit from switching to a different repayment plan. For example, those aiming for loan forgiveness should know that time in SAVE forbearance does not count toward forgiveness requirements.
Borrowers can use the Federal Student Aid website's loan simulator to check how different plans would affect their payments.
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New Repayment Assistance Plan Begins 2026
A new
Repayment Assistance Plan
(
RAP
) will start in 2026. It was included in the One Big Beautiful Bill signed into law by President Donald Trump on July 4, 2025.
RAP is designed to help low-income borrowers. Those earning under $10,000 annually will pay $10 per month. For those with higher income, payments range from 1–10% of income after subtracting $50 per child.
Hubert provided an example: a borrower with a $45,000 AGI and no children would pay $150 monthly under RAP.
Experts Urge Proactive Payment
Financial experts, including Hubert, recommend that borrowers begin paying interest immediately, even if they stay in forbearance. This helps prevent long-term debt growth.
The SAVE interest restart comes amid other challenges. Many Americans were unable to access their loan details this summer, causing confusion.
In another example, one couple paid off $190,000 in student loan debt in 27 months by using a financial tool.
FAQs
How much more will SAVE borrowers pay each month after August 2025?
Most SAVE borrowers could pay around $300 more each month due to the resumed interest, which amounts to about $3,500 annually.
What is the Repayment Assistance Plan starting in 2026?
RAP helps low-income borrowers. Payments start at $10 for low earners and scale based on income, adjusted by the number of children.
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