8 million student loan borrowers are in for a jarring surprise Aug 1 as Trump admin restarts mandated interest payments

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Almost 8 million federal student loan borrowers who enrolled in a Biden-era repayment program will soon see interest accruing on their debt again, even as their payments are paused due to an ongoing legal battle.

Starting Aug. 1, interest will begin accruing on loans that are currently enrolled in the Saving on a Valuable Education, or SAVE, repayment plan, the Education Department announced Wednesday. Some 7.7 million borrowers are enrolled in the plan, which was created under the Biden administration in 2023 and faced immediate backlash from conservatives.

In fact, the future of the SAVE repayment plan has been in legal limbo for months, following a lawsuit brought by seven Republican-led states. While the lawsuit plays out, borrowers enrolled in the plan have not had to make payments, and interest has not accrued. Now, interest will restart, though enrolled borrowers still do not need to make payments, the Education Department says. That means their balance could grow as they wait for the lawsuit to play out—and when forbearance ends, borrowers will be need to make monthly payments on the new, higher loan totals.

The Student Borrower Protection Center, a student loan advocacy group, estimates this will cost the typical borrower $3,500 per year, or $300 per month, in interest payments.

https://www.yahoo.com/news/8-million-student-loan-borrowers-191153933.html