Millions of student loan borrowers enrolled in a payment plan the Trump administration has called “illegal” will see their bills go up starting Friday as interest accrual resumes.
The nearly eight million student loan borrowers who rely on the Saving on a Valuable Education (SAVE) Plan — a repayment plan rolled out under former President Joe Biden — will start seeing interest accrue on their loans as of August 1. The repayment plan was among the generous to date, and many borrowers’ monthly payments dropped by as much as half, CNBC reports.
When announcing the change, the department said it “lacks the authority to put borrowers into a zero percent interest rate status,” according to a July statement.
The Biden administration rolled out the plan in 2023, but it has since faced Republican-led challenges. A court blocked parts of the plan last year, placing SAVE borrowers on a no-interest forbearance plan in the meantime.
Education Secretary Linda McMahon shared a video on X on Friday explaining that the “Trump administration will not allow the American taxpayer to take on debts that are not their own.”
“If you are a borrower enrolled in the illegal SAVE plan, please visit studentaid.gov to learn about affordable repayment options,” she said.
Now, borrowers are reacting to the change. Shelly Cornwell, a 55-year-old from Illinois, told The Wall Street Journal she has been in “limbo” for the past year after signing up for a SAVE plan.
She wasn’t making payments because her loans were in forbearance, so she signed up for a different plan to make progress toward forgiveness. Now, she’s worried her payments will go up and hopes she doesn’t have to take on another part-time job.
Jessica Ochoa, a 31-year-old from California, told the Journal that her life became more affordable after going on a SAVE plan.
“I realized, ‘Oh, wow, my loans are much more manageable and affordable. I can have a kid, I can buy a house,’” Ochoa told the outlet. “So then I did those things.”
On social media, users have also shared posts reacting to the decision.
“Completely forgot interest will start accruing on my student loans tomorrow,” one user wrote.
Experts say borrowers are likely better off finding new plans, CNBC reports. One of the best options at the moment is the Income-Based Repayment Plan, which caps borrowers’ monthly payments according to their income, the outlet reports. Borrowers could also opt for the Repayment Assistance Plan, which will launch next year.
These options are among the few income-driven plans that will be available to borrowers after Trump’s sweeping tax and spending legislation phased out many similar plans, CNBC reports.
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