Nearly eight million student loan borrowers will soon begin accruing interest on their debt again. The U.S. Department of Education announced Wednesday that interest charges for people enrolled in the Saving on a Valuable Education (SAVE) Plan will resume on August 1.
The income-driven repayment program, which was introduced by the Biden administration in 2023, allowed some low-income borrowers to qualify for $0 monthly payments on their federal student loans, while others could have their loans forgiven outright.
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The White House at the time said that student loan borrowers enrolled in the SAVE Plan who have made payments for at least 10 years and originally took out up to $12,000 are eligible to have their loans automatically forgiven.
Additionally, the White House said for every $1,000 borrowed above $12,000, a borrower can receive forgiveness after an additional year of payments. That means someone enrolled in the SAVE Plan with an original debt of up to $21,000 would have their loans forgiven by the time they reach 20 years of payments.
However, a lawsuit filed by seven Republican-led states argued that taxpayer dollars shouldn't be used to subsidize the student loan repayments of those who benefited from receiving higher education.
A federal appeals court ultimately sided with the plaintiffs, claiming the Biden administration was using the SAVE Plan as a workaround after the Supreme Court blocked former President Joe Biden's sweeping loan forgiveness plan in June 2023.
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The Education Department said it will soon begin reaching out directly to the nearly 7.7 million borrowers currently enrolled in the SAVE Plan, with instruction on how to begin making qualifying payments again.
“For years, the Biden Administration used so-called ‘loan forgiveness’ promises to win votes, but federal courts repeatedly ruled that those actions were unlawful," said U.S. Education Secretary Linda McMahon. "Congress designed these programs to ensure that borrowers repay their loans, yet the Biden Administration tried to illegally force taxpayers to foot the bill instead."
