A person walks on campus at Muhlenberg College in Allentown, Pennsylvania, U.S. March 26, 2025.
Hannah Beier | Reuters
Why is the interest-free forbearance ending?
Former President Joe Biden rolled out the SAVE plan in the summer of 2023, describing it as “the most affordable student loan plan ever.”
But millions of borrowers who signed up for the plan were caught in limbo after GOP-led lawsuits led to a block on the plan last year. The Biden administration put these borrowers in a forbearance while the legal challenges played out, and stopped interest from accruing on people’s debts in the meantime.
Forbearances are a period during which federal student loan borrowers are excused from making payments.
The Trump administration has called the SAVE plan illegal. In the announcement ending the pause, it said the Education Dept. “lacks the authority to put borrowers into a zero percent interest rate status.”
The Biden administration “invented a zero percent ‘litigation forbearance,’ forcing taxpayers to foot the bill,” the Education Dept. wrote.
Borrowers enrolled in the forbearance will not be charged interest retroactively, the department said.
What should SAVE enrollees do now?
Because the SAVE plan is no longer available and its interest-free forbearance is ending, borrowers need to move quickly to find a new repayment plan, experts said.
Unfortunately, the options are limited.
Currently, there is only one income-driven repayment plan available to borrowers: the Income-Based Repayment plan, said higher education expert Mark Kantrowitz. (Income-driven repayment plans cap borrowers’ monthly bills at a share of their discretionary income, with the aim of making payments affordable.)
President Donald Trump’s “one big beautiful bill” establishes another IDR repayment plan, known as RAP, but that plan won’t be operational until next year.
“The Department urges SAVE borrowers to consider enrolling in the Income-Based Repayment Plan authorized under the Higher Education Act until the Department can launch the Repayment Assistance Plan,” the agency said in its release.
