What Borrowers Need to Know About the SAVE Plan Forbearance Update
- Richard Dombrowski
- Jul 10
- 3 min read
If you or your child are on the Saving on a Valuable Education (SAVE) income-driven repayment (IDR) plan, you may have recently received a notice from Federal Student Aid. With key legal developments impacting this repayment option, it’s essential to understand what’s changing—and what steps you can take now to protect your financial future.
What’s Happening with the SAVE Plan?
In July 2024, a federal court issued a ruling that paused parts of the SAVE Plan. As a result:
Federal student loans under this plan were placed into forbearance.
During this time, no payments were required, and interest did not accrue.
However, that interest benefit is about to change.
What’s Changing on August 1, 2025?
In February 2025, a separate court decision ended the interest-free benefit of the SAVE Plan forbearance. This means:
Starting August 1, 2025, interest will begin accruing again on affected loans.
Loans will remain in forbearance, so you are not required to make monthly payments yet, but your loan balance will start growing due to interest.
What Can Borrowers Do Now?
Although you’re not obligated to make payments, you have several options to minimize long-term financial impact:
1. Make Optional Interest-Only Payments
You can log in to your loan servicer’s site and begin interest-only payments now. This helps prevent your balance from growing while loans are still in forbearance.
2. Explore Other Income-Driven Repayment (IDR) Plans
You may qualify for a different IDR plan with lower monthly payments based on your income. Some plans also offer progress toward loan forgiveness.
3. Consider a Term-Based Repayment Plan
If you prefer consistent monthly payments, you can switch to a term-based plan. These can be paused later using deferment or forbearance if your financial situation changes.
4. Use the Loan Simulator Tool
Visit StudentAid.gov and use the Loan Simulator to:
Estimate monthly payments
Review repayment options
Understand forgiveness timelines
Where to Learn More
The federal government continues to provide updates as the legal situation evolves. You can stay informed about changes to the SAVE Plan and other IDR options at:
Final Thoughts
Navigating student loan changes can be confusing, especially in a shifting legal environment. If you’re unsure how these updates apply to your situation—or want to understand how student loans fit into your broader financial plan—consider speaking with a financial planner who can help align your repayment strategy with your long-term goals.
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