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Some student loan borrowers are not currently required to make student loan payments. But not doing so can have expensive consequences, experts say.
On Aug. 1, the Trump administration resumed charging loan interest to borrowers who remain in the so-called SAVE forbearance. The Biden administration had offered the payment pause to those enrolled in its Saving on a Valuable Education plan, after that program became mired in legal challenges.
The SAVE plan is now essentially defunct, and the Department of Education has recommended borrowers switch into another plan.
Borrowers can remain in the forbearance for now, and hold off on making payments — but they will see their debt grow, among other consequences.
Here are three things to expect if you stay in the SAVE payment pause, and what to do instead.
1. Growing student debt balance
2. Stalled loan forgiveness progress
Borrowers who stay enrolled in the SAVE forbearance won’t make any progress towards student loan forgiveness. That includes those pursuing the Public Service Loan Forgiveness program.
It’s another reason to switch plans: Each monthly payment you make under a currently available income-driven repayment plan will likely bring you closer to debt cancellation. IDR plans cap borrowers’ monthly bills at a share of their discretionary income, with the aim of making payments affordable, and lead to debt erasure after a certain period — typically 20 years or 25 years.
“Hanging out in that [SAVE forbearance] status means losing time towards that goal,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps borrowers navigate the repayment of their debt.
3. A new repayment plan, eventually
The U.S. Department of Education will probably automatically move borrowers who don’t leave the SAVE forbearance into a new repayment plan by July 1, 2028, experts say. That new repayment plan was created under President Donald Trump’s “big beautiful bill,” and it’s called RAP, or the Repayment Assistance Plan.
However, “the Trump administration could require SAVE borrowers to switch repayment plans sooner,” Kantrowitz said. “And [it] is likely to do so.”
What SAVE borrowers can do now
The best move for SAVE borrowers is to switch into a repayment plan that is available, experts say. Most agree that the best IDR option at the moment is the Income-Based Repayment plan.
IBR may be one of a dwindling number of manageable repayment options left to borrowers, after recent court actions and the passage of Trump’s tax and spending bill. That legislation phases out other income-driven repayment plans.
There are tools available online to help you determine how much your monthly bill would be under different repayment plans.
Still, “not every borrower should be switching” out of SAVE, said Mayotte.
For example, some borrowers may use the payment reprieve to pay down other debt with a higher interest rate, she said. The average interest rate on credit cards is currently just over 20%, according to Bankrate.
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