Restarting interest on student loans for SAVE plan recipients leaves some individuals feeling overwhelmed and burdened.
As of late July 2025, the SAVE (Saving on a Valuable Education) income-driven repayment plan for federal student loans is undergoing significant changes. The U.S. Department of Education (ED) is urging borrowers currently in the SAVE plan to transition to another income-driven repayment (IDR) plan, particularly the Income-Based Repayment (IBR) plan, as the SAVE plan is being phased out.
Interest Resumption
Borrowers in the SAVE plan began having interest accrue again on August 1, 2025, after a prolonged pause during the pandemic-related freeze. This means that loan balances will start to increase again for SAVE plan borrowers.
Transition Required
The ED is urging borrowers to switch to another IDR plan, specifically recommending the IBR plan as a legally compliant alternative while the department prepares to implement a new Repayment Assistance Plan. The "One Big Beautiful Bill" Act, passed on July 4, 2025, introduces a new income-based Repayment Assistance Plan that will be available starting July 1, 2026. At the same time, it restricts future enrollment in the existing PAYE and ICR plans, in addition to SAVE, effectively replacing these older plans with the new Repayment Assistance Plan.
Impact on Borrowers
Borrowers moving from SAVE to IBR or other IDR plans should expect higher monthly payments because SAVE was the most affordable IDR plan to date, with many low-income borrowers having $0 or near $0 monthly payments. Borrowers aiming for Public Service Loan Forgiveness (PSLF) or other discharge programs must switch out of SAVE into alternative IDR plans to continue making qualifying payments. Loan servicers are expected to update systems and forms to reflect these changes, but some delays in application processing and updates may occur during this transition.
Advisory for Borrowers
The Department advises using the Loan Simulator tool to compare repayment plans and determine the most affordable option during this interim period before the new plan's rollout.
Stories of Affected Borrowers
Bronte Remsik, a medical resident, graduated with close to $300,000 in student loans and applied for the SAVE plan, but her application was never processed. Remsik's financial walls feel like they're crushing down around her despite graduating from medical school. Andrea Murzello, a pharmacist with a doctorate, has over $200,000 in student loan debt. Before the SAVE plan, Murzello was making monthly payments of around $1,000, which were reduced to about $400 under the SAVE plan. However, Murzello's application was also not processed, and she feels stuck in limbo with no clear guidance.
The Association of American Medical Colleges expects a deficit of up to 40,400 primary care physicians by 2036, partly due to the steep cost of medical education. Key parts of the SAVE plan were blocked by two federal judges in Kansas and Missouri, casting doubt on the plan's future.
In summary, the SAVE plan is no longer the default IDR option starting August 2025, with interest starting to accrue again, and borrowers must transition to other repayment plans—mainly IBR—until a new Repayment Assistance Plan launches in mid-2026. This change may result in higher monthly payments for many borrowers compared to SAVE’s historically low payment amounts. If you are a borrower on SAVE, it is crucial to review your repayment options promptly to avoid unexpected payment increases and to maintain eligibility for forgiveness programs where applicable.
- Given the upcoming changes to the SAVE plan and the introduction of a new Repayment Assistance Plan in 2026, politics surrounding student loan finance and education-and-self-development could have significant implications for general-news, especially for borrowers who may face higher monthly payments.
- The current SAVE plan, which is undergoing significant changes, overlaps with the finance sector and politics, as the issue of student loan repayment affects not only individual borrowers but also the wider economy, such as the projected deficit in primary care physicians due to the high cost of medical education.
