Millions of Americans must resume paying interest Friday on their federal student loans under the Saving on a Valuable Education (SAVE) plan.
The Biden Administration introduced the plan where income and family size determine monthly payments. It was intended to help borrowers reach loan forgiveness quicker.
After a series of legal challenges led by Republicans, almost 8 million SAVE borrowers saw their loans placed in forbearance in July 2024. Their loans accrued zero percent interest, but that will change starting Friday.
Borrowers’ balances will grow again, but they won’t be charged for retroactive interest.
The Department of Education reported more than 905,000 Hoosiers owe about $30.1 billion in federal student loans. Borrowers aged 35 to 49 have more debt compared to other age groups in Indiana, owing about $12.3 billion.
Challenges against the SAVE plan continue in federal court, but the plan will likely fade out in the next few years. The Trump Administration plans to move millions of borrowers to what it calls “legal” plans.
“For years, the Biden Administration used so-called ‘loan forgiveness’ promises to win votes, but federal courts repeatedly ruled that those actions were unlawful,” U.S. Secretary of Education Linda McMahon said.
More than half of Hoosiers with bachelor's degrees took out loans, according to the Commission for Higher Education.
The education department resumed collections for loans in June after a five-year hiatus, collecting about $282 million from defaulted federal student loans.
