MILLIONS of Americans have to start repaying loans that could feature cost hikes worth hundreds.
The direct payment requirement comes as part of a deadline this month for an interest pause.
At least $300 could be added to loan repayments for some Americans (stock image)[/caption]
Those who have student loans and signed up for a certain repayment plan that was available during Joe Biden’s former presidency are set to be affected, per CBS MoneyWatch.
Specifically interest on the loans was halted to relieve financial burden for those enrolled in the Saving on a Valuable Education (SAVE) repayment plan, created in 2023.
The situation was complicated last year when two courts made injunctions against the SAVE plan, placing it in limbo, as the Biden administration moved all enrollees to zero-interest forbearance.
That meant loan repayments through the plan were entirely place on hold and interest did not accrue during that time.
On July 9, 2025, the Department of Education confirmed in a statement that it would restart the interest charges for borrowers with the SAVE plan.
That restart began on August 1, which could mean an additional $300 in monthly charges, on average, posted for consumers in their account, according to findings from the Student Borrower Protection Center, an advocacy organization for people with college debt.
The Department of Education noted in its statement that the resuming of interest represented “fiscal responsibility” for borrowers.
Interest will also still accrue even through borrowers can choose to remain in forbearance for the time being with the SAVE plan.
GROWING AND GROWING
So while they won’t be required to make monthly payments, the amount owed will still continue to grow, a real difficult position to be in, according to what Earnest financial aid specialist, Bethany Hubert, told the publication.
“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,” Hubert said.
At an average of $300 a month in interest for SAVE plan borrowers, that’s a total of about $3,500 worth annually on the loan balance.
Of course, it isn’t the same for everyone.
On the Federal Student Aid website, there’s a loan simulator feature that can help calculate how the resumed interest will impact future payments.
There’s also an option to change from the SAVE loan plan to a different one, and Betsy Mayotte, president of The Institute of Student Loan Advisors, told CBS MoneyWatch that might be a good option for some borrowers, especially those seeking loan forgiveness.
Student Loan Statistics
- Student loan debt in the US is over $1.777 trillion
- Federal student loan debt accounts for 92.2%
- Average federal student loan debt amount per person is $38,375
- Students at a public university borrow $31,960 on average to attain a bachelor’s degree
Credit: Education Data Initiative
“The SAVE forbearance doesn’t count towards the payments needed to get the balance forgiven under those plans,” Mayotte said.
BILL BONUS?
There’s also a new Repayment Assistance Plan (RAP) set to arrive in 2026 as part of the One Big Beautiful Bill signed into law by President Donald Trump on July 4.
It helps those with low-income get relief.
For example, those earners who have adjusted gross income (AGI) less than $10,000, their monthly payment is just $10 under RAP, as noted by Hubert.
Americans whose AGI is above that level will have repayments based on one to 10% of their total income minus $50 every month for each child they have.
Hubert calculated that “a borrower who has an AGI of $45,000 and no children would have their monthly payment set at $150.”
Still, RAP payments could have a higher monthly cost than those who currently have the SAVE plan.
Experts like Hubert suggest that either way, borrowers start making payments “that cover the monthly interest as it begins to accrue to prevent your balance from growing.”
Americans were also left in a state of “confusion and anxiety” this summer after they couldn’t view student loan payment details.
A couple was also able to pay off $190,000 in student loan debt in just 27 months with a crucial tool.
