
Senators Push Back On Education Department Over SAVE Interest
A group of Senators on Monday urged Education Secretary Linda McMahon to stop the plans to begin charging interest to the nearly 8 million student loan borrowers enrolled in the SAVE student loan repayment plan who are currently in forbearance.
In a letter sent to the Secretary of Education, the Senators accused the Department of misleading the public by claiming that the interest restart was being required by a court order, though no such directive exists.
The Department of Education announced on July 9 that interest charges would resume on August 1 for borrowers in forbearance due to the SAVE plan legal injunction. To compound matters, actual borrower communication didn't go out until later - leaving borrowers less than a month to assess their options.
The Senators urged the Department of Education to stop the plan to restart interest, especially given that the Department has 'made no meaningful effort to restore timely access to other IDR plans' either.
What's Happening With The SAVE Repayment Plan?
The SAVE Plan was originally launched by the Biden Administration and promised to lower student loan payments for millions of borrowers. However, a group of Republican states sued the Biden Administration over the plan, and in July 2024 a Federal court judge issued an injunction, pausing the SAVE plan altogether. That ruling was upheld by the 8th Circuit Court of Appeals in February 2025.
In response to the injunction, the Department of Education placed borrowers already in the SAVE plan into an administrative forbearance, where no payments were due and no interest was accruing.
The idea behind this protection was that borrowers should not be harmed or held liable because of litigation or political challenges to the actual regulations.
In early July 2025, the One Big Beautiful Bill officially ended the SAVE student loan repayment plan - on a timeline. The bill phased out the repayment plan with an end date no later than June 30, 2028 (though it can come earlier). The bill also said that borrowers who fail to select a new repayment plan would automatically be placed into a new version of Income-Based Repayment (IBR), which would go into effect on July 1, 2026.
The bill also created a new repayment plan - the Repayment Assistance Plan (RAP) - which also goes into effect on July 1, 2026. This plan uses a slightly different formula to calculate monthly payments, and for borrowers who make less than $80,000 per year, it may actually be the less expensive option.
The issue, though, is that borrowers in the SAVE plan who may want to change to these plans cannot do so until July 1, 2026 - especially borrowers in SAVE who may not have access to the current version of IBR due to the 'financial hardship' requirement, which is being eliminated in 2026.
The RAP Plan may be a compelling option for borrowers, but it's simply not an option yet either.
The Senators argue the Department of Education should continue the payment and interest waivers, especially in light of the fact that borrowers who may want to change plans simply cannot do so currently.
Impact On Student Loan Borrowers
Resuming interest on the SAVE plan forbearance could end up costing borrowers an additional $300 per month in interest charges, according to a study from The Student Borrower Protection Center.
Borrowers in the SAVE forbearance have few options, because of the ongoing changes and backlogs in processing student loan repayment plan applications.
Borrowers in SAVE can simply wait - no payments are due - but they'll see their loan balances grow and won't be making progress towards loan forgiveness.
Borrowers can also change repayment plans. The Income-Based Repayment Plan (IBR) is available, along with Pay As You Earn (PAYE) and Income Contingent Repayment (ICR). However, for some borrowers this may not work until 2026, because of the previously mentioned financial hardship requirement.
And PAYE and ICR are also being phased out between 2026 and 2028 - meaning borrowers who switch into these plans may end up switching again in a year or two.
Furthermore, there is a massive backlog in IDR repayment plan applications, and some borrowers are reporting the processing taking 60-90 days, with no end in sight.
All of these changes are creating a massive workload for loan servicers, who not only have to change their internal systems, but have to handle the flood of calls from concerned borrowers - who they may not even be able to give answers to yet.
What Happens Next?
The decision to restart the SAVE forbearance interest is also coming at a time when the Department of Education is moving ahead with massive layoffs, and dealing with the biggest changes to student loan repayment in decades.
Borrowers have a choice to make: do they continue to wait in the SAVE forbearance despite interest accruing, or do they take steps to change repayment plans now - only to face potentially changing repayment plans again in 2026?
While the letter from Senators Elizabeth Warren, Bernie Sanders, and Chuck Schumer is a positive sign of oversight, it's not likely to change the outcome for borrowers. Interest will be resuming, and borrowers will have to make tough choices on their loans.
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