Interest to accrue for millions of student loan borrowers on SAVE plan

Starting today, millions of student loan borrowers will start accruing interest again on their loans. The change is coming after the Department of Education last week stopped the cancellation of student loans in income-based repayment plans. Lee Waldman explains what it means. Attention student loan borrowers enrolled in the SAVE plan. On August 1st, the Department of Education will resume charging interest on your loans. The SAVE plan, introduced under former President Joe Biden's administration, lowers monthly payments and shortens the time it takes to receive student loan forgiveness based on enrollees' income. Now that plan and the 8 million or so borrowers who utilized it are in for some changes. This plan has been tied up in litigation and the Trump administration decided, without ever being enforced by a court, to start interest charges for those borrowers. Last year, federal judges in Kansas and Missouri blocked key parts of the SAVE plan. Following those courts' decisions, SAVE borrowers were placed in no-interest forbearance with payments paused and balances frozen since last summer. Today, interest will start to accrue again. Once payments start, we expect they're going to pay about $5,000 more per year, including those interest charges, once they actually have to start making payments. Mike Pierce, head of the Student Borrower Protection Center, says deciding what to do next is up to individuals. Starting payments now or continue with forbearance. But either way, their balances will increase, causing stress for borrowers like medical resident Bronte Remsick. I've spent my entire 20s in school and so now in my 30s and as a young professional, I would love to have a life. The financial walls just feel like they're crushing down around me when I thought graduating medical school was the big win. In New York, I'm Leigh Waldman reporting. And under President Trump's big, beautiful bill, there are only two repayment plans that are available. One allows borrowers to repay their loans over 10 to 25 years and payments are based solely on the loan amount. The other is a replacement to the SAVE program with monthly payments between 1 and 10 percent of their income. That second option starts next July.