As ofAugust 1, 2025, interest has resumed accruing on federal student loans for borrowers enrolled in theSaving on a Valuable Education (SAVE)plan. This change comes in the wake of afederal court injunctionthat paused key benefits of the SAVE plan, including the popular0% interest accrualfeature.

What Does This Mean for Borrowers?

Although borrowers remain ingeneral forbearance—meaning no monthly payments are currently required—interest is now accumulating. This could lead to agrowing loan balanceover time, even if you're not actively making payments.

Time to Reevaluate Your Repayment Strategy

Given these developments, it may be wise to explore alternative repayment plans that better align with your financial goals. TheU.S. Department of Educationhas reopened applications for severalincome-driven repayment (IDR)plans, including:

• Pay As You Earn (PAYE)

  • Caps monthly payments at10% of discretionary income
  • Offersloan forgiveness after 20 yearsof qualifying payments

• Income-Based Repayment (IBR)

  • Limits payments to10–15% of discretionary income
  • Forgiveness after20–25 years, depending on when you borrowed

• Income-Contingent Repayment (ICR)

  • Payments based on20% of discretionary incomeor a fixed 12-year plan, whichever is less

Important Note:Some plans, such asPAYEandICR, are scheduled to bephased out by July 1, 2028, under the"One Big Beautiful Bill" Act.

What Should You Do Next?

Now is a great time toreview your current loan situationand determine the most beneficial repayment strategy. The Department of Education has released a press statement regarding the resumption of interest accruals, which you can read here.

If you’d like help evaluating your options or have questions about your loan strategy, feel free toschedule a consultation. I’m here to help you navigate these changes and make informed decisions.