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Mementojpeg | Moment | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
Some student loan borrowers are not currently required to make student loan payments<\/a>. But not doing so can have expensive<\/a> consequences, experts say.<\/p>\n On Aug. 1, the Trump administration resumed charging loan interest to borrowers<\/a> 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.<\/p>\n The SAVE plan is now essentially defunct, and the Department of Education has recommended borrowers switch into another plan.<\/p>\n Borrowers can remain in the forbearance for now, and hold off on making payments \u2014 but they will see their debt grow, among other consequences.<\/p>\n Here are three things to expect if you stay in the SAVE payment pause, and what to do instead.<\/p>\n<\/div>\n 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<\/a>.<\/p>\n 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 \u2014 typically 20 years or 25 years.<\/p>\n “Hanging out in that [SAVE forbearance] status means losing time towards that goal,” said Betsy Mayotte, president of\u00a0The Institute of Student Loan Advisors<\/a>, a nonprofit that helps borrowers navigate the repayment of their debt.<\/p>\n<\/div>\n 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\u00a0Donald Trump<\/a>‘s “big beautiful bill<\/a>,” and it’s called RAP<\/a>, or the Repayment Assistance Plan.<\/p>\n However, “the Trump administration could require SAVE borrowers to switch repayment plans sooner,” Kantrowitz said. “And [it] is likely to do so.”<\/p>\n<\/div>\n 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\u00a0Income-Based Repayment plan<\/a>.<\/p>\n 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.<\/p>\n There are tools\u00a0available online\u00a0to help you determine<\/a>\u00a0how much your monthly bill would be under different repayment plans.<\/p>\n Still, “not every borrower should be switching” out of SAVE, said Mayotte.<\/p>\n 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%<\/a>, according to Bankrate.<\/p>\n<\/div>\n<\/div>\n\n1. Growing student debt balance<\/h2>\n
2. Stalled loan forgiveness progress<\/h2>\n
3. A new repayment plan, eventually<\/h2>\n
What SAVE borrowers can do now<\/h2>\n
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