Senators Question ED’s Validity of Resuming Interest Accrual for SAVE Borrowers
By Maria Carrasco, NASFAA Staff Reporter
Last week, the Department of Education (ED) announced that, due to a court decision, borrowers enrolled in the Saving on a Valuable Education (SAVE) repayment plan will begin accruing interest on their loan balances starting August 1. Now, three senators are questioning the validity of the department’s decision and pressing for answers regarding ED’s backlog of income-driven repayment (IDR) plan applications.
In its announcement last week, ED stated that due to a February court order from the 8th Circuit Court of Appeals, which blocked the SAVE repayment plan from being implemented in its entirety, the department does not have the authority to put SAVE borrowers into a zero-percent interest rate forebearance. Borrowers enrolled in the SAVE plan were initially put in an interest-free forbearance last summer after the repayment plan legal challenges began.
On Monday, Sens. Chuck Schumer (D-N.Y.), Elizabeth Warren (D-Mass.), and Bernie Sanders (I-Vt.) sent a letter to Education Secretary Linda McMahon questioning ED’s decision, claiming that it “appears to be justified by a false premise”— the February injunction placed by the 8th Circuit Court of Appeals.
The senators noted that this decision will be “devastating” to borrowers and their families, and “unfairly” raises student loan repayment costs for millions of borrowers. Notably, the senators mentioned that ED has over a million unprocessed IDR applications, which is hindering borrowers – including those enrolled in SAVE – from returning to repayment.
“This decision will be devastating for millions of American families,” the senators wrote. “And because of the backlog of 1.5 million unprocessed IDR applications and the glacial pace at which new applications are being approved, most SAVE borrowers currently have no alternative to this forbearance as they are unable to enroll in an alternative IDR plan and make progress towards debt relief via PSLF or IDR.”
The senators wrote that when the 8th Circuit Court of Appeals placed an injunction on the SAVE plan, the court did not order ED to resume interest for these borrowers. Furthermore, ED has the authority to suspend interest for borrowers enrolled in SAVE through the Higher Education Act (HEA), the lawmakers argued.
The senators submitted six questions for ED to answer, including questions on the IDR application backlog, communications to SAVE borrowers, and more. The senators requested answers from ED by July 28.
“Under your leadership, ED has continuously failed student loan borrowers, jacking up costs and ripping up consumer protections,” the senators wrote. “This new policy is another example of the Trump Administration’s deliberate disregard for the millions of Americans shouldering student loan debt across the country. You should immediately reverse this policy so that millions of borrowers are not forced to pay billions of dollars in unnecessary interest charges.”
Publication Date: 7/17/2025
You must be logged in to comment on this page.