On August 1, interest will begin accruing for 7.7 million borrowers in the SAVE repayment program. Despite the ongoing legal disputes preventing payments, borrowers will see their loan balances increase. The Student Borrower Protection Center estimates added interest costs around $3,500 annually per borrower. The SAVE plan allows some low-income borrowers to pay $0 monthly and offers potential debt forgiveness after 25 years. The approach to student loans has shifted since the Biden administration with blanket forgiveness no longer under consideration.
Starting Aug. 1, interest will begin accruing on loans enrolled in the Saving on a Valuable Education repayment plan as borrowers await the resolution of a legal battle.
Interest will restart for 7.7 million borrowers, although they do not need to make payments at this time, causing their loan balances to potentially increase.
The Student Borrower Protection Center estimates the typical borrower will incur $3,500 per year in additional interest, due to the pause in payments during legal disputes.
The SAVE plan offers low-income borrowers the chance to pay $0 monthly, but debts could still grow with interest accruing during forbearance.
#federal-student-loans #biden-administration #save-repayment-plan #interest-accumulation #borrower-advocacy
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