Lana Oconnell
The COVID-19 pandemic has had a significant impact on the financial situation of many student loan borrowers. While the US government implemented relief measures such as the Saving on a Valuable Education (SAVE) Plan, which offered a year of zero-interest forbearance, these measures have now come to an end as of August 2025. Borrowers who remain in the SAVE Plan will see interest start accruing on their loans, potentially increasing their debt burden. This has left millions of borrowers concerned about their repayment options and seeking alternatives to manage their student loan debt. The Biden administration's student loan forgiveness regulation remains in limbo due to legal challenges, further complicating the situation. With the recent changes and the ongoing restructuring of the nation's student loan system, borrowers are now navigating a complex landscape of repayment plans and seeking guidance on the best course of action to manage their debt effectively.
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What You'll Learn
Interest-free payment pause ends
The interest-free payment pause for student loan borrowers under the Biden-era Saving on a Valuable Education (SAVE) plan has ended as of August 1, 2025. The Trump administration has resumed charging interest to borrowers who remain enrolled in the SAVE forbearance. This means that borrowers who stay in the SAVE plan will see their loan balances grow as interest accrues.
The Biden administration offered the payment pause to those enrolled in the SAVE plan after the program faced legal challenges. However, the SAVE plan is now considered essentially defunct, and the Department of Education has recommended that borrowers switch to another repayment plan. The Department will begin reaching out to the nearly 7.7 million borrowers enrolled in the SAVE plan to provide instructions on how to transition to a new, legal repayment plan.
Borrowers who remain in the SAVE forbearance will not make any progress toward student loan forgiveness, including those pursuing the Public Service Loan Forgiveness program. Additionally, staying in the SAVE plan can lead to negative amortization, where the loan balance increases instead of decreasing over time. According to calculations by higher education expert Mark Kantrowitz, a typical borrower with an average outstanding federal student loan balance of $39,000 and an interest rate of 6.7% could see their debt grow by $219 a month in interest charges alone if they stay in the SAVE forbearance and make no payments.
While the resumption of interest charges will increase costs for borrowers, there are alternative repayment plans available that may better suit their needs. The Trump administration has introduced the Repayment Assistance Plan (RAP), which caps monthly payments at a share of the borrower's discretionary income and provides debt erasure after a certain period. RAP also includes a new perk where any interest left after the borrower makes their monthly payment is waived. Borrowers can use the Loan Simulator to compare available repayment plans, estimate monthly payments, and determine eligibility.
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Income-Based Repayment plan
The Income-Based Repayment (IBR) plan is one of four federal income-driven repayment plans that tie monthly payments to earnings and family size. The other three are Pay As You Earn (PAYE), Income-Contingent Repayment (ICR), and Saving on a Valuable Education (SAVE). The IBR plan is the only income-driven plan that is not affected by a court injunction.
The IBR plan promises loan forgiveness after 20 or 25 years of payments, with monthly payments capped at between 10% and 20% of discretionary income. It was created in 2007 and has been spared from lawsuits because Congress explicitly allowed loan forgiveness at the end of the repayment term.
The Biden administration encouraged borrowers interested in loan forgiveness to sign up for the plan, especially the 7.7 million enrolled in SAVE. However, in July 2025, the Trump administration paused student loan forgiveness under the IBR plan. The administration stated that the pause was due to system updates required to comply with a court order. The Education Department noted that while the injunction does not impact forgiveness under IBR, it does affect the types of forbearances that could be counted toward forgiveness under the program.
Borrowers who were previously enrolled in an IDR plan and selected the IBR plan do not need to submit a new application. The Department of Education recommends borrowers with loans in the SAVE plan use the Loan Simulator to estimate monthly payments under available repayment plans.
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Loan forgiveness paused
The Biden-era Saving on a Valuable Education (SAVE) plan, which offered lower payments and a faster path to loan forgiveness, has been halted. This means that borrowers who remain enrolled in the plan will see their loan balances grow as interest accrues. The Trump administration has also resumed charging interest to borrowers who remain in the SAVE forbearance. This means that borrowers who stay in the plan will not make any progress toward student loan forgiveness.
The Department of Education has suspended student loan forgiveness under the Income-Based Repayment (IBR) plan, which is one of four federal plans that tie monthly payments to earnings and family size with the promise of loan forgiveness after 20 or 25 years of payments. The department has provided a vague explanation for the suspension, stating that the system is being updated to "accurately count months not affected by the court's injunction" directed at the SAVE plan.
The suspension of student loan forgiveness under IBR has left borrowers with limited options. They can continue to make payments under IBR and hope to receive refunds for excess payments once their loans are discharged, or they can request a forbearance to suspend payments while they wait for a discharge. However, interest will continue to accrue during the forbearance period, and it is unclear how long the pause will last.
The Trump administration will support borrowers in selecting a new, legal repayment plan that suits their needs and helps them achieve financial sustainability while protecting taxpayers. The Department of Education has recommended that borrowers switch to another plan, such as the Repayment Assistance Plan (RAP).
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SAVE forbearance
The Biden-era Saving on a Valuable Education (SAVE) Plan was a federal student loan repayment plan that offered zero monthly payments and loan cancellation. However, multiple federal courts struck down the policies, deeming them unlawful. As a result, the Department of Education will restart interest accrual for borrowers with loans in the SAVE Plan, with interest starting on August 1, 2025.
The SAVE forbearance allowed borrowers to pause their federal student loan payments temporarily without accruing interest. While this could provide short-term relief, staying in forbearance could lead to negative consequences. Firstly, borrowers in the SAVE forbearance will see their loan balances grow as interest accrues. Secondly, remaining in forbearance stalls progress toward loan forgiveness. This includes those pursuing the Public Service Loan Forgiveness program.
Experts recommend that borrowers consider switching to an alternative repayment plan, such as an income-driven repayment (IDR) plan. IDR plans cap monthly payments at a share of the borrower's discretionary income, making payments more affordable. These plans also offer debt erasure after a certain period, typically 20 or 25 years. The Department of Education encourages borrowers to use the Loan Simulator to compare available repayment plans and determine the best option for their financial goals.
However, it is important to note that not every borrower should switch out of SAVE. Some borrowers may benefit from the payment reprieve to pay down other high-interest debt. It is recommended that borrowers carefully evaluate their financial situation and seek expert advice to make an informed decision regarding their loan repayment strategy.
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New repayment plans
The Biden administration's Saving on a Valuable Education (SAVE) Plan, which was rolled out in summer 2023, has been halted as of August 1, 2025. This was due to a federal court injunction that blocked its implementation, including the zero percent interest rate status for borrowers.
The Trump administration is now supporting borrowers in selecting a new, legal repayment plan. The Department of Education has begun outreach to the nearly 7.7 million borrowers enrolled in the SAVE Plan, with instructions on how to transition to a legal repayment plan.
The Income-Based Repayment (IBR) plan is currently the best option for borrowers. It is one of four federal plans that tie monthly payments to earnings and family size, with the promise of loan forgiveness after 20 or 25 years of payments. IBR is not subject to the court battles involving other plans, and the Education Department has been encouraging borrowers interested in loan forgiveness to sign up for it.
The Loan Simulator is a tool that borrowers can use to estimate monthly payments under different repayment plans, determine repayment eligibility, and identify the best option for their goals.
Borrowers who are worried about affording their monthly payments should check their eligibility for payment pauses where interest won't accrue, such as unemployment deferment for those with direct subsidized loans.
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Frequently asked questions
Yes, you can still pay your student loans during the coronavirus. However, there was an interest-free payment pause on student loan bills during the pandemic, which has since ended.
The Saving on a Valuable Education (SAVE) plan was a federal student loan repayment plan rolled out by the Biden administration in summer 2023. It calculated payments based on 5% of a borrower's discretionary income.
As of 2025, there are two repayment options for new borrowers: a standard repayment plan with fixed monthly payments, and an income-based repayment plan. The Income-Based Repayment (IBR) plan is one of four federal plans that tie monthly payments to earnings and family size, with the promise of loan forgiveness after 20 or 25 years.
