Back-to-school season has kicked off with anxiety for more than 42 million people carrying federal student debt. The federal government holds 91.6% of all student loans in the country.
President Donald Trump is shutting down the SAVE (Saving on a Valuable Education) program, established in 2023 under the Biden administration. SAVE paused interest on federal student loans as long as borrowers continued to pay down the principal, and forgave the debt entirely after 10 years.
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No more forgiveness. As Forbes reports. On Aug. 1, the clock started ticking again on federal student loan interest.
According to the U.S. Department of Education, this affects 42.7 million borrowers, each with an average student debt of $39,075 — totalling an estimated $1.6 trillion.
If you’re one of them, this is what you need to know about the changes, and how to manage your payments going forward.
SAVE allowed borrowers to make payments based on income and suspend payments if they didn’t earn sufficient money. For those with undergrad degrees, payments were capped at 5% of discretionary income.
The program encouraged borrowers to make regular loan payments by freezing interest as long payments were made monthly — and fully forgave federal student debt after 10 years of regular payments.
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It was a relief to millions of Americans who saw their federal student loan debt balloon due to interest over the years — with as many as five million in default on their payments in April 2025 and another 4 million in late-stage delinquency, close to defaulting.
Those numbers are likely to grow due to the changes outlined in Trump’s One Big Beautiful Bill Act. Even if borrowers make regular payments on their student debt, interest is accumulating.
According to CNET, a borrower earning $60,000 a year could see their $217 monthly payments on a $30,000 student loan under SAVE jump by an additional $100 per month under the Trump administration’s student loan plans.
