I’d like to give you a good idea of what’s happening, especially if you’re one of the millions who are relying on the SAVE (Saving on a Valuable Education) student loan repayment plan. Starting this August, the Trump administration plans to begin paying interest on loans already in the SAVE plan forbearance. That’s to say your so-called frozen loan balance will start growing again—and it won’t be long.
This change affects roughly eight million borrowers, some of whom were promised for months that their loans would not earn any more interest during this freeze. In a sense, many just can’t help but wonder why it’s happening now.
Why is this happening now?
The step, which was first reported by Politico, comes at a time of record-breaking dislocation within the Department of Education. Following layoffs and buyouts of employees, the department has shed nearly half its workers. This has resulted in gigantic backlogs in processing repayment requests and forgiveness applications, leaving borrowers in limbo.
At the same time, President Trump recently signed a new law passed by Republican lawmakers. It eliminates some of the lower-repayment plans and raises monthly payments for millions. And the disruption doesn’t end there—later this summer, over five million people who defaulted on loans are going to have their paychecks garnished.
Borrowers and advocates are outraged
Borrower advocacy groups aren’t being silent. They are calling the step to start charging interest a betrayal, especially for borrowers who were counting on the SAVE plan to bring real relief. “Borrowers already have trouble getting through customer service, let alone good answers or help,” said Mike Pierce, director of the Student Borrower Protection Center.
“Instead of fixing the broken student loan system,” Pierce said, “Secretary McMahon is choosing to drown tens of millions of people in duplicative charges of interest.” He went on to say that people like teachers, nurses, and clerks who counted on the government are being “sucker-punched” by surprise bills that could charge them hundreds more a month.
What this means for you
If you’re on the SAVE plan or were placed in forbearance, this interest change could significantly increase your loan balance. For many, it feels like the rules are being rewritten mid-game—and not in their favor.
Worst of all, the Education Department has still not provided borrowers with a direct path to exit forbearance or transition to better plans. With phone lines jammed and backlogs accumulating, millions are stalled in limbo awaiting help that can come too slowly.
Looking ahead
This shift in policy may be a turning point for federal student loans in America—one where confidence within the system only worsens. Borrowers are being required to pay more, with fewer protections and with minimal warning.
If you’re affected, keep an eye out for official updates from your loan servicer and the Department of Education. But prepare now—because come August, that loan of yours might start growing again, whether you’re ready or not.
Read this later:
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