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Economic Times
02-08-2025
- Business
- Economic Times
Millions face $300 monthly hike as SAVE Student Loan interest resumes in August
Agencies Student loan borrowers face new interest charges as SAVE repayment plan resumes in August 2025. Student loan borrowers under the SAVE repayment plan will see significant changes starting August 2025. 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 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. On July 9, 2025, the Department of Education confirmed that the interest pause would end. Interest started accumulating again on August 1, 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 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. Also Read: Gary Busey Guilty: Did he actually try to undo bra of a woman at Monster-Mania Convention 2022? See what happened 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 advised that borrowers consider paying at least the monthly interest to avoid balance 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 can use the Federal Student Aid website's loan simulator to check how different plans would affect their payments. Also Read: Is Venmo and Paypal down today? Live updates on outage, user impact and alternative payment options 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, 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 provided an example: a borrower with a $45,000 AGI and no children would pay $150 monthly under experts, including Hubert, recommend that borrowers begin paying interest immediately, even if they stay in forbearance. This helps prevent long-term debt SAVE interest restart comes amid other challenges. Many Americans were unable to access their loan details this summer, causing another example, one couple paid off $190,000 in student loan debt in 27 months by using a financial tool. 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.
Time of India
02-08-2025
- Business
- Time of India
Millions face $300 monthly hike as SAVE Student Loan interest resumes in August
Student loan borrowers under the SAVE repayment plan will see significant changes starting August 2025. 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. Explore courses from Top Institutes in Please select course: Select a Course Category PGDM others CXO Artificial Intelligence Operations Management MCA Product Management Technology Healthcare Data Science Cybersecurity Leadership Data Science Management MBA Data Analytics healthcare Digital Marketing Public Policy Project Management Others Finance Degree Design Thinking Skills you'll gain: Financial Analysis & Decision Making Quantitative & Analytical Skills Organizational Management & Leadership Innovation & Entrepreneurship Duration: 24 Months IMI Delhi Post Graduate Diploma in Management (Online) Starts on Sep 1, 2024 Get Details On July 9, 2025, the Department of Education confirmed that the interest pause would end. Interest started accumulating again on August 1, 2025. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like The Best Method for a Flat Stomach After 50 (It's Genius!) Lulutox Undo 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. Live Events Also Read: Gary Busey Guilty: Did he actually try to undo bra of a woman at Monster-Mania Convention 2022? See what happened 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. Also Read: Is Venmo and Paypal down today? Live updates on outage, user impact and alternative payment options 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.
