Student Loan Borrowers Face Consequences for Remaining in SAVE Forbearance

Federal student loan borrowers who remain in the Biden-era SAVE forbearance face mounting financial risks following recent policy changes, including resumed interest charges, halted loan forgiveness progress, and eventual automatic transfer to a new repayment plan. As of August 1, 2025, the Trump administration reinstated interest accrual on loans for borrowers who have stayed in the Saving on a Valuable Education (SAVE) payment pause.

This shift follows legal challenges that effectively dismantled the SAVE plan, which had previously allowed borrowers to pause payments without incurring interest. Remaining in the forbearance now carries three primary consequences:

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1. Accruing Interest and Growing Debt: Borrowers who do not exit the SAVE forbearance will see their loan balances rise due to resumed interest charges. According to higher education expert Mark Kantrowitz, a borrower with the average federal loan balance of $39,000 and an interest rate of 6.7% could accrue approximately $219 in interest per month. “If they stay in forbearance, it will just dig them into a deeper hole,” Kantrowitz warned.

2. Halted Progress Toward Loan Forgiveness: Staying in forbearance also suspends progress toward student loan forgiveness programs, including Public Service Loan Forgiveness. Betsy Mayotte, president of The Institute of Student Loan Advisors, emphasized that “hanging out in that [SAVE forbearance] status means losing time towards that goal.”

3. Automatic Enrollment in a New Plan by 2028: If borrowers do not act, the Department of Education is expected to transition them to a new Repayment Assistance Plan (RAP) by July 1, 2028. Kantrowitz noted that this switch could happen sooner under the Trump administration’s authority.

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Experts recommend borrowers consider switching to an available income-driven repayment plan, such as Income-Based Repayment (IBR), while noting that some individuals may benefit from temporarily prioritizing higher-interest debts.