Some student loans start accruing interest today. Here's what you should know
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Interest starts accruing on Friday for student loan borrowers who enrolled in a Biden administration repayment plan.
Why it matters: 7.7 million borrowers enrolled in former President Biden's Saving on a Valuable Education (SAVE) Plan will start to see their student debt balances increase.
- The average borrower will have to pay more than $3,500 per year, or $300 per month, in interest charges, according to a July report from the Student Borrower Protection Center.
State of play: The Department of Education will contact borrowers enrolled in the SAVE Plan and offer to move them to other repayment plans to begin making qualifying payments.
- "Borrowers will be responsible for making monthly payments that include any accrued interest as well as their principal amounts," the Education Department said in July.
- Interest will not be assessed retroactively. Borrowers can remain in forbearance, but their interest will start to grow.
Zoom in: Borrowers can use the federal government's loan simulator to estimate and compare monthly payments under available repayment plans.
- Borrowers who previously submitted an income-driven repayment application and selected certain plans do not need to submit a new application, per the Education Department.
What we're watching: The recently passed "Big Beautiful Bill" included stipulations for a new income-based repayment assistance plan that will be available to borrowers by July 2026.
- Administrative wage garnishment is expected to begin later this summer, per the Education Department.
Flashback: Two courts last year blocked Biden's the SAVE Plan, and borrowers were placed in no-interest forbearance until now.
- The Department of Education resumed collections on May 5, with millions of borrowers behind on their payments following the five-year, pause during the pandemic.
Go deeper: What to know about forgiveness pause in IBR student loan repayment plans
