Student loan interest for millions resumes on Aug. 1. Here's what to know.
The Department of Education announced on July 9 that it planned to restart charging interest for borrowers enrolled in the Saving on a Valuable Education, or SAVE, plan, which was created by the Biden administration in 2023 to help lighten the financial burden faced by millions of student loan borrowers.
But two courts last year issued injunctions against the SAVE plan, effectively halting the repayment program. In response, the Biden administration moved all of the SAVE plan's enrollees into zero-interest forbearance, meaning that their loans were temporarily placed on hold and interest stopped accruing.
The Education Department says resuming interest on the loans represents a measure of "fiscal responsibility," according to its July 9 statement. But the monetary impact on the roughly 8 million borrowers enrolled in the SAVE plan could be significant, given that a typical borrower could see an increase of $300 per month due to new interest charges, according to a calculation by the Student Borrower Protection Center, an advocacy group for people with higher-education debt.
SAVE enrollees can opt to remain in forbearance, which means they won't need to make monthly payments, but "the most significant impact is that your total loan balance will start growing again" because interest will resume, Bethany Hubert, a financial aid specialist at lender Earnest, told CBS MoneyWatch.
She added, "If you choose not to make payments, the accruing interest can really balloon your balance, making it much more challenging and expensive to pay back over time."
How much will my payment increase?
While the typical borrower could see costs increase by about $300 per month, or $3,500 per year, the specific increase will depend on your loan balance.
Borrowers can check how the resumption of interest on their loans will impact their payments by going to the loan simulator on the Federal Student Aid website, Hubert said, although she noted that it might not yet include all the recent changes impacting student loans.
Should I change repayment plans?
Borrowers should evaluate the four repayment plans available, which can be found at here at the Federal Student Aid website, Hubert said.
There's also a new repayment plan in the works that borrowers could consider, called the Repayment Assistance Plan (RAP), which is due in 2026 and is part of the "big beautiful" tax and spending bill signed into law by President Trump on July 4.
"For earners who make less than $10,000, their [monthly] payment will be $10 under RAP," Hubert said.
For those with adjusted gross income (AGI) above $10,000 per year, the repayments will be based on 1% to 10% of their income minus $50 in payments each month for each child the borrower has. "With that in mind, we can estimate that a borrower who has an AGI of $45,000 and no children would have their monthly payment set at $150," she added.
"At a minimum, I would suggest trying to make payments that cover the monthly interest as it begins to accrue to prevent your balance from growing," she added.
Watch: Hawaii Gov. Josh Green gives update on tsunami warning
Honolulu Mayor Rick Blangiardi gives tsunami warning update
Tsunami warning issued for Hawaii after 8.7 earthquake near Russia
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CBS News
20 minutes ago
- CBS News
Trump fires Bureau of Labor Statistics commissioner after disappointing job numbers
President Trump ordered his administration to fire the commissioner of labor statistics, Erika McEntarfer, after the July jobs report showed a sharp slowdown in hiring and a steep downward revision to May and June's hiring numbers. "No one can be that wrong? We need accurate Jobs Numbers. I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY," Mr. Trump wrote on social media. He added, "She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can't be manipulated for political purposes." The president described the latest report, which showed employers in July added a weaker-than-expected 73,000 jobs, as "a shock," adding that the downward revision of 258,000 fewer jobs created in May and June was a "major mistake." —This is a breaking news story and will be updated.
Los Angeles Times
21 minutes ago
- Los Angeles Times
Trump's EPA puts California in its crosshairs with its proposed car rules
The U.S. Environmental Protection Agency's recent proposal to repeal its own 2009 finding that greenhouse gas emissions endanger public health marks a major U-turn for the nation's climate progress. While it's impact will be felt nationwide, the plan takes direct aim at California. In supporting documents released in the wake of Tuesday's proposal, the nation's top environmental agency outlined the justifications for its plan to rescind the so-called endangerment finding and roll back its longstanding regulations for planet-warming greenhouse gas emissions from all motor vehicles, including cars and trucks. 'As a result of these proposed changes, engine and vehicle manufacturers would no longer have any future obligations for the measurement, control, and reporting of [greenhouse gas] emissions for any highway engine and vehicle,' the agency wrote in its rule summary. But the documents, including an 80-page notice of proposed rulemaking and 60-page draft regulatory impact analysis, also contain several nods to California policies, referencing the state by name 27 times — by far more than any other state. That's largely because for more than 50 years, California has been granted unique authority from the EPA to set stricter tailpipe emissions than those mandated by the federal government. This authority, obtained through waivers issued by the EPA, has been critical to the state's efforts to address its notorious smog and air quality issues, which are driven partly by transportation emissions and by California's unique topography that traps pollutants in its interior basins. The waivers were also the basis for California's nation-leading plan to ban the sale of new gasoline-powered cars by 2035 and transition to electric vehicles. The EPA's documents repeatedly state that California's waivers have officially been repealed. As of publication, however, the Trump administration's unprecedented effort to do so in June is still winding its way through the court system following a lawsuit from the state. Notably, the EPA's own analysis of the possible outcomes of its proposal indicate that without California's leadership — and without the tax credits created under President Biden's Inflation Reduction Act — national adoption of electric vehicles will decline. At the same time, gasoline prices will increase because of the higher demand from more gas-powered vehicles on the road. 'They don't seem to have put together that strong of a case,' said Chris Busch, director of transportation and a senior economist with Energy Innovation Policy & Technology, a nonpartisan think tank, who reviewed the analysis. 'What this shows is that the net impact is less favorable when you reduce the California [Advanced Clean Trucks rule], when you take away the California waivers and remove the IRA credits.' In a statement this week, EPA administrator Lee Zeldin said repealing the endangerment finding would have economic benefits for the American people. 'If finalized, rescinding the Endangerment Finding and resulting regulations would end $1 trillion or more in hidden taxes on American businesses and families,' Zeldin said. According to the EPA, that $1-trillion savings would come from rescinding vehicle regulations built upon the endangerment finding. That includes the Biden administration's electric vehicles sales target, which the agency refers to as an 'EV mandate.' The EPA also said removing the endangerment finding would save Americans $54 billion in costs annually through the repeal of greenhouse gas standards. Busch said he could not readily see how the agency arrived at that figure based on the analysis provided. With California's rules repealed, 'you end up with fewer EVs, more gasoline cars, more demand for gas and higher gas prices,' he said. The EPA also argues that electric vehicles are sucking up energy that could be better used elsewhere — 'from factories to data-center servers to air-conditioning.' It uses California as an example of this perceived misappropriation of electricity, pointing to a 2022 memo from the California Independent System operator that urged people to reduce energy use, including EV charging, during a record-breaking heat wave. The EPA's announcement stunned many members of the environmental community who condemned it as a dangerous abdication of the agency's mission to protect human health and the environment. Among the agency's many claims are that no technology currently exists to reduce greenhouse gases enough to measurably affect global climate change concerns without risking greater harm to public health and welfare, such as increased vehicle prices. But major U.S. automakers such as GM and Ford have already committed to an electric future — as have international competitors such as China, which is investing heavily in electric vehicles. According to the California Energy Commission, about 22% of new vehicles sales in the state in the second quarter of this year were zero-emission vehicles. 'Despite Trump's full-on attack, Californians are choosing the clean simplicity of ZEVs,' read a statement from CEC Commissioner Nancy Skinner. 'Make no mistake: California is not backing down from its ZEV goals. We will continue to heavily invest in accessible and reliable ZEV infrastructure, making the ZEV driving experience better each day.' Busch said California has several tools at its disposal to defend itself and preserve its clean vehicle progress. In the heavy-duty space, the California Air Resources Board already has the Clean Truck Partnership — an agreement with nearly all truck manufacturers in the state to meet advanced emissions reduction targets. The state's heavy vehicle incentive program also provides funding opportunities for fleet owners to replace older heavy-duty diesel vehicles with zero-emission ones. There are also legislative possibilities, such as Assembly Bill 914, which would give CARB more authority to regulate indirect sources of pollution such as warehouses. One way those warehouses could meet those rules would be by increasing their electric truck fleets, Busch said. CARB also employs a clean-mile standard for transportation companies such as Uber and Lyft, which will see them gradually increase their zero-emission miles, and a similar tactic could be employed for the freight sector, he said. 'States have a lot of options still,' Busch said. 'There is a lot of momentum.' In a statement this week, CARB chair Liane Randolph described the EPA's proposals as 'the latest moves from this feckless federal government that choose polluter fantasyland over proven science.' 'Meanwhile, back on Earth, the planet continues to suffer from the consequences of unchecked carbon pollution as heatwaves, floods and wildfires threaten increasingly uninsurable communities everywhere,' Randolph said. 'Unlike this negligent administration, California won't turn our backs on what is happening right before our eyes. We choose reality, science and innovation — and we know we are not the only ones.'
The Hill
21 minutes ago
- The Hill
Trump demands official overseeing jobs data be fired after dismal employment report
WASHINGTON (AP) — President Donald Trump on Friday called for the firing of the head of the agency that produces the monthly jobs figures after a report showed hiring slowed in July and was much weaker in May and June than previously reported. Trump in a post on his social media platform alleged that the figures were manipulated for political reasons and said that Erika McEntarfer, the director of the Bureau of Labor Statistics, who was appointed by former President Joe Biden, should be fired. 'I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY,' Trump said on Truth Social. 'She will be replaced with someone much more competent and qualified.' Friday's jobs report showed that just 73,000 jobs were added last month and that 258,000 fewer jobs were created in May and June than previously estimated. McEntarfer was nominated by Biden in 2023 and became the Commissioner of the Bureau of Labor Statistics in January 2024. Commissioners typically serve four-year terms but since they are political appointees can be fired. The commissioner is the only political appointee of the agency, which has hundreds of career civil servants. Trump focused much of his ire on the revisions the agency made to previous hiring data. Job gains in May were revised down to just 19,000 from 125,000, and in June they were cut to 14,000 from 147,000. In July, only 73,000 positions were added. The unemployment rate ticked up to a still-low 4.2% from 4.1%. 'No one can be that wrong? We need accurate Jobs Numbers,' Trump wrote. 'She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can't be manipulated for political purposes.' The monthly employment report is one of the most closely-watched pieces of government economic data and can cause sharp swings in financial markets. The disappointing figure sent U.S. market indexes about 1.5% lower Friday. While the jobs numbers are often the subject of political spin, economists and Wall Street investors — with millions of dollars at stake — have always accepted U.S. government economic data as free from political manipulation.
