top of page

Interest for SAVE Plan Student Loans Resumes Accrual August 1

Updated: Jul 14

On Wednesday, July 9th, 2025, the Department of Education announced that interest accrual would resume on August 1st, 2025 for federal student loans in the SAVE plan. This announcement impacts about 8 million borrowers whose loans have been in forbearance for almost a year. With less than a month between the announcement and the reinstatement, and with larger overhauls to repayment plans in the pipeline, many borrowers (including physicians in our online doctor communities) may find themselves scrambling to figure out what to do. Below, we cover the latest update, what this means for borrowers, and how to prepare for pending changes. Options include staying put and waiting to see what updates come, changing to another federal repayment program, and student loan refinancing. Please note that this situation is evolving, and it’s important not to make hasty decisions - consult with appropriate expertise as indicated.


Disclosure/Disclaimer: This page contains information about our sponsors and/or affiliate links, which support us monetarily at no cost to you, and often provide you with perks, so we hope it's win-win.. These should be viewed as introductions rather than formal recommendations. Our content is for generalized educational purposes. Please do your own due diligence before making decisions based on this page. Nothing on this page constitutes formal or personalized legal or financial advice. Laws and taxes vary based on location and while this information is accurate to the best of our knowledge, it may not be up to date or apply in your location or personal situation. We are not formal financial, legal, or tax professionals, and you should consult these as appropriate. To learn more, visit our disclaimers and disclosures.


Interest is resuming on federal student loans in the SAVE plan, and other things you should know with July 2025 updates


What is the SAVE plan?


The SAVE plan (Saving on a Valuable Education plan) is a federal student loan repayment plan put in place in 2023 under the Biden administration. The goal of the SAVE plan was to reduce monthly student loan payments based on family income and size. Borrowers who signed up for the SAVE plan were potentially eligible for loan forgiveness after a set number of payments toward their student loan debt.


For many borrowers, including doctors, the SAVE plan resulted in lower monthly payments than with other repayment programs. Some borrowers even had $0/month payments under the plan.


Additionally, borrowers in the previous REPAYE plan may have automatically been converted to the SAVE plan.



SAVE plan injunction and challenges


Since its introduction, the SAVE plan has been challenged legally in the court systems. In July 2024, a federal court injunction blocked parts of the SAVE plan, which resulted in loans being placed in forbearance with a 0% interest rate, where they currently remain in July 2025.


During the SAVE forbearance, borrowers have not been required to make payments. Because interest has not been accruing for some time, loan balances have not increased while the loans were in forbearance.


This time spent in forbearance without payments has not counted toward federal student loan forgiveness programs, such as PSLF or IDR qualified months.




Interest resuming for student loans in the SAVE plan


On July 9, the Department of Education announced that they plan to resume charging interest on student loans in the SAVE plan for borrowers who have been in forbearance. This change is set to begin on Friday, August 1st, 2025.


This shift comes as a surprise for many who are enrolled in the SAVE plan, especially given the still pending legal challenges. This is particularly confusing and leaving many scrambling to determine what to in the few weeks before interest accrual resumes because:

  • The interest starting to accrue will mean loan balances will start going up

  • Since payments have not restarted, any payments made during this time will still not count toward loan forgiveness


The Office of Federal Student Aid is currently working on updating interest rates on accounts. Once updated, borrowers will be able to view their interest rates and outstanding interest amounts in their loan details. Until all accounts have been updated, borrowers can see their interest rate on each loan on their StudentAid.gov dashboard.


The Department of Education has stated that interest will not be calculated retroactively for the forbearance period.



Will I have to start making student loan payments again?


At this time, borrowers will not have to make payments until the SAVE forbearance ends. As the lawsuit is still pending, payments may not automatically resume starting August 1st, 2025. It’s important to note, however, that loan balances will now increase with accrued interest, and time in further forbearance still would not count toward forgiveness programs.


Depending on your goals, it might be a good idea to make payments even if not required.


Related PSG Perk:

  • Physician Side Gigs has partnered with Grad Loan Advice™ to help PSG members optimize their student loan repayment strategy. Every consultant at Grad Loan Advice™ is a Certified Student Loan Professional (CSLP®), bringing expertise and clarity to the often-confusing world of student loans. Through a 1-hour consultation, they’ll break down your options in detail, empowering you to make informed decisions about your debt. Whether you’re navigating changes brought by the One Big Beautiful Bill Act or exploring repayment strategies for the first time, Grad Loan Advice™ is here to guide you. PSG members receive $50 off when you schedule your consultation today through our dedicated partner page.



Phase out plans for SAVE plan borrowers under the One Big Beautiful Bill


With the announcement of interest accrual resuming, the Department of Education stated that they will begin reaching out to borrowers on the SAVE plan with instructions on how to move to a new repayment plan.


This announcement from the Department of Education comes less than a week after the passing of the 2025 reconciliation bill, also known as the One Big Beautiful Bill, which plans to overhaul income-driven repayment (IDR) plans for current and future borrowers.


Under the One Big Beautiful Bill, the following repayment programs are set to phase out between 2026 - 2028:

  • SAVE

  • PAYE

  • ICR


The official phase out timeline for the SAVE plan is still undetermined. Some suggest the plan will end by summer 2026, though the decision could come a lot sooner depending on how pending litigation resolves.



Next steps for borrowers under the SAVE plan


This latest news, along with the long-term plans to eliminate the SAVE plan should have physicians assessing alternative options as soon as possible so they can plan and make adjustments accordingly. That said, most caution against hasty decisions as the situation is still evolving.


Borrowers who remain in one of the repayment programs referenced above when it officially phases out will automatically be enrolled into a new option, which may not be a good fit.



Determine what your new monthly payment may be under the various federal programs, and how much you will pay over the life of the loan with each


For many physicians, the SAVE plan offered the best monthly payment option, so a change may create a drastic increase in the monthly payment amount.


The 2025 Reconciliation Bill (AKA as the ‘Big Beautiful Bill’) also included the creation of a new Repayment Assistance Plan (RAP). Note, this plan isn’t projected to be available to borrowers until around July 1, 2026. The most important thing for most physicians to know about RAP is that it will calculate payments based on your AGI, not your discretionary income. This RAP plan may also leave borrowers in debt for up to 30 years. This may mean that a forced switch to RAP could lead to such a large amount in payments for physicians that the math on going for forgiveness may no longer make sense over student loan refinancing and paying off debt as quickly as possible.


As IBR often results in higher monthly payments for doctors, a change to either program could result in extremely high payments, even if you’re working toward PSLF.



Options for borrowers under the SAVE plan


Options for borrowers with federal student loans under the SAVE plan

Applying for a change to a different income-driven repayment plan


Borrowers have the option to apply for a different IDR plan. The Department of Education has resumed processing applications for the ICR, IBR, and PAYE plans, though as noted above, PAYE and ICR are also set to phase out within the next few years. A transition into one of these plans may only offer a temporary option, and borrowers should still consider long-term planning. As the new legislation and plans become clearer with definitive timelines, things can happen quickly, so make sure you stay up to date if you choose to make a short term change while you await further guidance.


If you are close to receiving forgiveness with only a relatively small number of qualifying monthly payments left, you may want to consider doing this even if you have higher monthly payments, just to ensure that your payments are counting towards PSLF or other forgiveness programs. Remember, if you stay in SAVE, any payments would not count towards forgiveness, and you may find yourself in a situation where the monthly payments later may be much larger if you don’t switch to one of the other available options prior to them sunsetting.



Public Service Loan Forgiveness (PSLF) buyback option


For borrowers who already have 120 months of qualifying employment, there is a PSLF buyback option with allows you to buy back certain months in your payment history that didn't count as qualifying payments because of forbearance or deferment status.


This applies for the particular situation where:

  • You have an outstanding loan(s) balance, and

  • You have approved qualifying employment for the months in question, and

  • Buying back these months will complete your total 120 qualifying PSLF payments.


In order to take advantage of the PSLF buyback option, you have to make an extra payment of what your payments would have been under your IDR plan during the months you wish to buy back.


It's unclear how long this option will remain in effect, so it may be a bit of a gamble, but if you meet the criteria above, it's worth checking into. You can view the full details of the PSLF buyback on the FederalStudentAid website.


If you qualify and decide to take advantage of the buyback option, make sure to include the following phrase in your PSLF reconsideration request for buyback (taken directly from the FederalStudentAid website page):


"I have at least 120 months of approved qualifying employment, and I am seeking PSLF or TEPSLF discharge through PSLF buyback. Please assess my eligibility for PSLF buyback.”


Refinancing outside of PSLF


If you’re a physician who is not planning on going for PSLF and if you have calculated that the new options are going to result in much higher payments, this may be a good time to assess refinancing your loans to a private option. This isn’t a decision to be made lightly, as once you refinance public loans into private loans, you cannot reverse the decision and go back into the federal program. 


For those who do the math on the new programs and realize that they’ll pay more in payments than it would take to pay off their loans, refinancing and paying the loans off as quickly as possible may start to make more sense. Additionally, if cashflow is an issue, refinancing may result in a lower monthly payment, especially if a change from SAVE to IBR or the upcoming RAP will result in a huge spike in your monthly payment that will be difficult to manage.



The Loan Simulator on the StudentAid website can help borrowers compare estimated monthly payments under available repayment plans.


Refinancing companies won’t do a hard pull on your credit unless you decide to go forward with refinancing, so checking rates won’t affect your credit. It can be worth checking as you explore potential options, and PSG members receive perks through our sponsors.


Related PSG perk:

  • SoFi: SoFi has partnered with Physician Side Gigs to offer a 0.25% rate discount when you refinance student loans. SoFi is a leader in student debt refinancing that’s going beyond their already competitive rates for members like you. You could save thousands with this exclusive member discount rate. Flexible terms let you lower monthly payments or pay off your debt sooner. You could even get a discount for autopay—or just for having a medical school loan. And SoFi charges no fees. See terms and view your rate in two minutes at SoFi.com/PhysicianSideGigs



Consider staying in the SAVE program and awaiting further guidance


If it’s not obvious what you should do, you may want to consider staying in the SAVE program for now despite interest accrual. While there’s no timeline on when things may change or be resolved, if you’re not sure that you want to make a switch to one of the other repayment plans or undergo student loan refinancing and take yourself out of the federal system, the most reasonable option for you may be to sit tight and await further guidance. 


In this situation, you’ll have to decide whether to make payments to avoid your student loan balance increasing as interest accrues, despite the fact that the payments won’t count towards forgiveness.


If you need help navigating your options, our partners at Grad Loan Advice can help.


Related PSG Perk:

  • Grad Loan Advice™ helps individuals optimize their student loan repayment strategy. Every consultant at Grad Loan Advice™ is a Certified Student Loan Professional (CSLP®), bringing expertise and clarity to the often-confusing world of student loans. Through a 1-hour consultation, they’ll break down your options in detail, empowering you to make informed decisions about your debt, whether you’re navigating changes brought by the One Big Beautiful Bill Act or exploring repayment strategies for the first time. PSG members receive $50 off when you schedule your consultation through our dedicated partner page.



Conclusion


Unfortunately, as with most things student loans over the past 5 years since the pandemic hit, there is a lot of rolling the dice when it comes to federal loans and what to do with them. While interest will start accruing again beginning August 1st, payments will remain paused while the SAVE plan stays in forbearance under the current legal challenges. While the future of the SAVE plan remains uncertain, the current administration announced with the Big Beautiful Bill their plan to phase out the SAVE plan entirely within the next year or so. Under the current forbearance, which has paused payments, time is not counting toward PSLF. We strongly urge physicians to continue to monitor updates and to begin assessing alternative options to the SAVE plan so they aren’t scrambling last minute as upcoming changes arrive. 


That said, unless there’s a slam dunk obvious best option in your situation, we would caution against hasty decisions or making decisions without mapping out each scenario. If the last few years are any indication, things could always change again. 



Related resources for physicians


Learn more about:

bottom of page