By Josh 
(New federal rulings are about to change everything for student loan borrowers. Here’s what you need to know before August 1st.)
🚨 The SAVE Plan Interest Bomb
The Biden-era SAVE (Saving on a Valuable Education) plan has shielded millions of borrowers from interest accrual since its launch—but that ends August 1, 2025.
Starting that day, nearly 8 million borrowers will begin seeing interest build up again on their loan balances—even if they’re making payments.
📉 Example: A borrower with a $32,000 balance could see $3,200–$4,000 in extra interest each year, depending on their rate and income.
This reversal, announced by the Department of Education in July 2025, is expected to cost borrowers thousands over the life of their loan.
🧨 “This is a quiet disaster in the making,” says student debt policy expert Betsy Mayotte. “Millions aren’t prepared for interest to resume.”
The government is encouraging SAVE plan users to switch to other income-driven repayment (IDR) options, but many of those come with higher payments.
⏳ SAVE and PAYE Plans to Be Eliminated by 2028
As part of the new One Repayment Framework proposed under Trump’s Education Department, existing plans like SAVE and PAYE will be phased out entirely by July 1, 2028.
Borrowers will be forced into one of two “streamlined” plans, expected to include:
-
A standard 10-year repayment plan
-
A new Repayment Assistance Plan (RAP), which may cap payments but extend the timeline significantly
If enacted, this change will eliminate many of the interest subsidies and forgiveness features currently protecting low- and middle-income borrowers.
🧮 A borrower earning $52,000/year with $35,000 in loans under SAVE may pay $0/month today, but under RAP they could owe $250+/month.
Borrowers who want to preserve their current plan benefits need to stay alert and prepare to recertify early before potential auto-conversion.
⚠️ Public Service Loan Forgiveness (PSLF) Under Attack
The Public Service Loan Forgiveness (PSLF) program—which forgives loans after 10 years of qualifying payments for public service workers—is also on shaky ground.
In early July, administration officials floated a proposal to disqualify forgiveness for borrowers working in organizations with a “substantial illegal or ideological purpose.”
This could potentially exclude workers at clinics providing gender-affirming care, certain immigration nonprofits, and other politically targeted groups.
🔎 If your employer is flagged, your years of payments may no longer count toward forgiveness.
This controversial policy is still under review, but legal and financial uncertainty is already deterring young workers from entering public service.
🧠What You Can Do NOW
📉 Avoid interest shocks: Use our free tool below to estimate how much more you’ll owe after August 1.
⏳ Check your repayment plan: If you’re on SAVE, weigh the pros/cons of switching to another IDR option before plan phaseouts begin.
🛡 Protect your PSLF path: Make sure your employer and job still qualify under current PSLF rules—and re-certify annually.