Starting Friday, the U.S. Department of Education will start charging interest for student loans in the SAVE plan.
Dan Hirst knows he’s not alone. He’s got federal student loans.
“This SAVE plan was a lifeline to us,” Hirst said.
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Hirst enrolled in the SAVE plan.
Back in 2023, the Biden administration launched what they called the most affordable repayment plan ever created: the Saving on a Valuable Education (SAVE) plan.
Hirst explained it felt like a light at the end of the tunnel.
“I’m like I’m going to get this taken care of. This is a great thing,” Hirst said. “I’m finally going to be able to pull my head from under water, and then things change, which they often do, but I feel like the rug has been ripped out from under me.”
SAVE has faced legal challenges, which meant borrowers enrolled had their federal student loans put in forbearance with a zero percent interest rate. But starting August 1, the Department of Education said borrowers with loans in the SAVE forbearance will see those loans begin accruing interest.
“It’s like a weight around your neck that I’m going to carry until well after I retire,” Hirst said.
Over the last few weeks, officials reached out to the nearly 7.7 million borrowers enrolled in the SAVE plan.
Christie Arkovich, the founder of Arkovich Law who specializes in student loans, reminds SAVE borrowers of one important point.
“There’s no payments required though as of August 1st, so no one needs to freak out right now with respect to payments being due, but decisions do need to be made,” Arkovich said.
Though borrowers in SAVE will see their balances grow, there are other options. You can use an online loan simulator to estimate monthly payments under available repayment plans.
“We’ve been encouraging folks, and this continues today, to go onto IBR, Income-Based Repayment, if they can afford the payment and if they want to accrue months towards forgiveness because the SAVE forbearance didn’t count any of the months towards ultimate forgiveness,” Arkovich said. “If you can’t afford the payment, then you can continue to stay on the SAVE forbearance until you’re forced off, or you can look at PAYE. PAYE is Pay As You Earn.”
While taking it one step at a time, Hirst said it’s an issue he hopes lawmakers take note of.
“I hope that they open their eyes and see that the vast majority of people that need this are working for them, are working for the people,” said Hirst. “There’s not that many crooks out there just sitting and being lazy. We’re doing our best.”
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