Special Announcement:
Today, July 9, 2025, the Department of Education announced that borrowers who are in the SAVE Plan forbearance will begin accruing interest on August 1st. They are encouraging borrowers to apply for another repayment plan. Currently, borrowers can apply for ICR, PAYE, and IBR income-driven plans. Please note that loan servicers have a significant backlog of applications. Use studentaid.gov to submit any repayment plan change requests and follow your application closely.
Q: Does this mean the SAVE forbearance is ending?
A: Not really. The zero percent interest rate status is ending. While no payment is due, you’ll be charged interest and not earn any progress towards forgiveness if you remain in the SAVE forbearance after August 1st. That’s not a great trade-off.
Q: Should I switch out of the SAVE forbearance now?
A: Probably. Seeing your balance increase with no credit towards forgiveness is not a great position to be in. However, student loan forgiveness significantly discounts the interest you pay, and forgiveness pathways are available.
For example, let’s say you rack up $10,000 of interest in the SAVE forbearance and reach student loan forgiveness down the line using IBR or the new Repayment Assistance Program (RAP). Forgiven debt is subject to federal (and state) income taxes. If you pay 30% tax on the forgiven balance, then the interest you accrue during the forbearance will cost you about $3,000 (0.3*10,000). But watching your student loan balance grow is no fun, so that can be a hard equation to swallow.
Q: Which repayment plan should you choose if you do switch?
A: It depends on your Income-Driven Repayment (IDR) Profile:
- IDR Profile 1 (eligible for IBR 2014, PAYE, and ICR), then choose PAYE.
- IDR Profile 2 (eligible for PAYE, IBR 2009, and ICR), then choose PAYE.
- IDR Profile 3 (eligible for IBR 2009 and ICR), then choose IBR 2009 if your student debt balance exceeds your income. Consider ICR if your income exceeds your student debt balance.
Read the PAYE vs. IBR 2014 post for more detailed information on choosing another repayment plan.
Expert Tip: Know Your IDR Profile
- Grab a student aid data file from studentaid.gov;
- Upload it to the VIN Foundation My Student Loans tool;
- Review the IDR Eligibility tab
Q: Why choose PAYE instead of IBR 2014? Isn’t PAYE going to be eliminated?
Yes, PAYE is now scheduled to be eliminated on July 1, 2028. However, you can use it to make forgiveness-eligible payments until then and prevent any unpaid interest you have from capitalizing (being added to your principal balance) when you eventually switch from PAYE to IBR or the new RAP.
If you switch from SAVE to IBR now, then leave IBR for the new RAP plan when it becomes available July 1, 2026, your unpaid interest will capitalize. The higher your principal balance, the more interest you accrue. The more interest you accrue, the higher your repayment costs.
When possible, we try to avoid unpaid interest capitalization. For those who are eligible (IDR Profiles 1 & 2), PAYE serves as a strategic bridge to get you to either IBR 2014 or RAP later.
Q: What happens if I choose not to switch from the SAVE forbearance?
You will accrue interest on the principal balance in your unpaid interest account. Your unpaid interest is separate from your principal balance. You are not charged additional interest on your unpaid interest unless it capitalizes (gets added to your principal).
You will also not earn forgiveness credit while your unpaid interest balance grows.
Q: What if I don’t want to switch to another income-driven plan?
You can also switch to a time-driven repayment option. Depending on your student loan balance and loan types, you can choose a fixed or graduated 10-year plan, an extended or graduated 25-year plan, or a 30-year fixed or graduated plan if your loans are consolidated.
Time-driven plan minimum payments are calculated from your total student loan balance and your remaining time in repayment. For those with student debt balances greater than their income, a time-driven payment will most likely be higher compared to an IDR monthly payment. Time-driven plan payments are also not eligible for forgiveness credit.
If you’re going to make student loan payments, it’s better to earn forgiveness credit just in case you need it later.
Q: Need help? I know I do 🤯
Have more questions? Post a comment below or email [email protected].
We’re here to help!
Dr. Tony Bartels graduated in 2012 from the Colorado State University combined MBA/DVM program and is an employee of the Veterinary Information Network (VIN) and a VIN Foundation Board member. He and his wife have more than $400,000 in veterinary-school debt that they manage using federal income-driven repayment plans. By necessity (and now obsession), his professional activities include researching and speaking on veterinary-student debt, providing guidance to colleagues on loan-repayment strategies and contributing to VIN Foundation initiatives.
23 thoughts on “Student Loans in SAVE Plan Will Start Accruing Interest August 1st”
So what would be a reason for someone to choose to stay on the SAVE plan?
Hi Haley,
Thanks for your post!
I can see from the recent student aid file that you uploaded to the VIN Foundation My Student Loans tool that you’re in IDR Profile 1 — an enviable position to be in. That means you have the option of switching from SAVE to PAYE until July 1, 2028, then to IBR 2014 where you can still receive forgiveness after 20 years of qualifying payments.
Why would you choose to remain in the SAVE forbearance when interest starts accruing? Maybe because you see what your monthly payments will be and you need some time to get your budget to accommodate your payment. For some folks, if they are pretty sure they will reach student loan forgiveness, then accruing some interest for a while longer, maybe until the new Repayment Assistance Program (RAP) is available, will not appreciably increase their total repayment costs.
In general, it will be better to earn forgiveness credit while you’re being charged interest. So if you can get a reasonable monthly payment and forgiveness credit, great! And since you are in IDR Profile 1, that should be possible. But if you think you need some more time with no payment, then you can leave your loans in the SAVE forbearance longer.
If you’d like more detailed help, submit a secure Student Debt & Income Signalment form and we’ll start an anonymous student debt discussion on the VIN Foundation Student Debt message board for you!
I’m on PAYE and stuck in a processing forbearance where I’m not building interest. My last notification from my loan servicer was that I don’t need to recertify until my certification date next year. Will I also start building interest again on August 1st and need to put in a recertification request now?
Hi Hannah,
Welcome back 🙂
You’re going to need to pay very close attention to your loans this August. As far as I know, only loans that showing the SAVE plan will start accruing interest this August. If you applied for SAVE, but have been stuck in a forbearance since then, you might not see your loans accrue interest on August first. But if you tried to recertify for PAYE and they never processed that because of the pause on applications earlier this year, I would imagine they would resume your PAYE payments and start your interest accrual any time now.
We’ll probably need a bit more information than we can handle here to say for sure in your case — specifically, a newer student aid data file uploaded to the VIN Foundation My Student Loans tool and a secure Student Debt & Income Signalment form with a more detailed history on what you did with your student loans and what your loan servicer has been telling you.
If you submit a signalment form, we’ll start a dedicated anonymous thread for you on the VIN Foundation Student Debt Message Board area.
What do you think — sound like a plan?
I’m on the SAVE plan and I really don’t know what to do now?
Hi Courtney,
Thanks for posting!
Did you see the follow-up post about where to head next when interest starts accruing for loans in SAVE? https://vinfoundation.org/student-loan-repayment-trying-to-leave-the-save-forbearance-choose-paye/
From your recently uploaded student aid data file, I can see that you’re in IDR Profile 3. That means you can switch to ICR or IBR 2009. Head over to studentaid.gov and see what your monthly payment would be using either of those plans. As long as those payments will fit into your budget, then choose the one with the lowest minimum monthly payment. That way, you’ll earn forgiveness credit while accruing interest.
If you need a bit more time to get your budget in order to make that payment work, then leave your loans in the SAVE forbearance until you’re ready to switch (or they make you switch).
If you’d like more detailed help, submit a secure Student Debt & Income Signalment form and we’ll start an anonymous student debt discussion on the VIN Foundation Student Debt message board for you!
What do you think — sound like a plan?
Hi Tony and team! Thanks so much for this great student debt resource. I went ahead and applied and was just approved for IBR payment plan since I was in SAVE. I was shocked that my payment went from zero in SAVE to over $600 per month in IBR. That seems and feels like a huge jump and will be a lot to factor in. I was wondering if that sounded surprising to you and if I should do more to investigate or if you know of any other options? Thanks so much if you can resend to this.
Hi Kelly,
Thanks for your post!
I hear ya — unfortunately, the payments for IBR 2009 are not nearly as beneficial as the payments are for SAVE, PAYE, or IBR 2014. Since you’re in IDR Profile 3, you’re only other income-driven options are IBR 2009 and ICR. Given your loan balance, IBR 2009 is likely going to have the lowest minimum monthly payment available for you until the new Repayment Assistance Program (RAP) start July 1, 2026.
The first thing you should do whenver you get a monthly payment estimate for an income-drivnen plan is check their math. Here are two pages you can use to estimate your monthly income-driven plan payment from your recent taxable income, marital status, tax filing status, and family size:
If they are cacluating it correctly, great. If not, ask them how they arrived at their number and try to correct it.
And if you would like to dive deeper into your student loan details on the Student Debt Message Board area for veterinarians and veterinary students (anonymously if you prefer), please submit a secure Student Debt & Income “Signalment” form.
Sound like a plan?
Hi Tony! How do I know what IDR profile I’m in? I am thinking of switching out of SAVE to PAYE. I’ve posted on the forum in the past so hopefully you can see my loan info!
Hi Beverley,
Thanks for the post!
You’re in IDR Profile 1, which means you’re eligible for both PAYE and IBR 2014. You can see that when you upload your student aid data file to the VIN Foundation My Student Loans tool and click the “IDR Eligibliity” tab. We also talked about it in your dedicated thread on the student debt message baords 🙂 I see you have a new post there too. We’re a bit behind recently with all of the continued and accelerating changes, but we’ll get a reply for you there soon too. Thank you in advance for your patience.
Hello, I would like to share a unique perspective. For someone who is planning on paying of their loans in their entirety and not pursuing forgiveness, I do not see a reason to switch from SAVE to PAYE (I am in category 2).
Under SAVE, I can make payments according to my financial ability and desires to pay off accruing interest and potentially principle. Under PAYE, on the other hand, I am REQUIRED to make the payment no matter my financial situation that given month.
Is there any benefit to PAYE over remaining on SAVE, other than future forgiveness considerations? I am 100% certain that I will not be pursuing either PSLF or the 25-year forgiveness pathway.
Please correct me if I am wrong and there is some other benefit for PAYE for those of us not pursuing forgiveness in any form. Thank you.
Hi Michael,
Thanks for following along and posting!
I wouldn’t say that you’re wrong. There is no right or wrong in student loan repayment. There are pros and cons to every decision. You’re certainly welcome to do what you suggest. You are correct that while your loans are in the forbearance with no payment due, you can choose how much you’d like to pay and target specific loans when you do make payments. And that will work out just fine as long as you don’t reach forgiveness.
However, the cons in that scenario are not earning forgiveness credit for your payments. I know you state you’re 100% certain you won’t reach forgiveness — I wish stating it made it so 🙂 You never know what the future holds. It’s better to earn forgiveness credit and not need it than to not receive forgiveness credit and figure out later that you could have used it.
Another con — you have a really favorable interest rate for your student loans given the amount. There’s not a huge incentive to accelerate your student loan payoff. There’s an opportunity cost to paying more than required for your student loans. You can almost certainly earn a higher return doing something better with your funds than making student loan payments when none is due or paying more than you’re required to pay.
Being in IDR Profile 2, you do have access to PAYE, which means you’re minimum monthly payment would be quite reasonable until PAYE is eliminated after July 1, 2028. And if your financial situation worsens and you can’t make the PAYE minimum payment, you can apply to have the payment lowered. That’s one of the nice aspects of the income-driven repayment plans, as confusing as it’s been lately.
And if your income grows, maybe to a level that is greater than your student loan balance, then you’ll pay your student loans to zero before reaching forgiveness anyway. Better to let your income make that determination so you can explore other financial opportunities to increase your overall financial wellness. If you can do all of that and still accelerate your student loan payoff, great — go for it! 🙂
Thank you for the informative post. I am confused about the interest subsidy offered. If I am eligible to have interest covered by the subsidy under IBR, should I go with IBR? After IBR ends, or if I move to another repayment plan, should I expect to have to pay back the subsidized interest? Thank you for the help!
Hi Leah,
Thanks for your post!
>>> If I am eligible to have interest covered by the subsidy under IBR, should I go with IBR?<<< Great question. We don't talk about this much, particularly for veterinarians because the unpaid interest subsidy available for IBR only applies to Direct Subsidized Loans (a subtype of loans only available for undergraduate education). The first 3 years you use IBR for your Direct Subsidized loans will come with an unpaid interest subsidy -- meaning that if your minimum monthly payment using IBR for those Direct Subsidized Loans is less than your monthly interest accrual, the government covers that difference. That benefit is only available for the first 3 years you use IBR. Should you use IBR only for that subsidy? It depends on your student loan details -- how much of your balance are Direct Subsidized Loans vs. other Direct Loan types? What other income-driven repayment plans are you eligible to use? What is your monthly payment for each of those repayment options given your income? >>>After IBR ends, or if I move to another repayment plan, should I expect to have to pay back the subsidized interest?<<< Point of clarification -- IBR is not ending. In fact, Income-Based Repayment (IBR) will be one of the only remaining options after July 1, 2026, for those who are in repayment now. The income-driven plans that are ending will be Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and Saving on A Valuable Education (SAVE). Those plans will be eliminated after July 1, 2028. You can see which repayment options you're able to use by uploading a federal student aid data file into the VIN Foundation My Student Loans tool. I didn’t see one for you so I’m not able to tell you which repayment options you’re eligible for or how much of your balance is Direct Subsidized vs. other Direct Loan types.
If you’re currently using one of those plans, you can continue using them until July 1, 2028. Then you would need to choose either IBR or the new Repayment Assistance Program (RAP) to have payments that use your income to set your monthly payment. RAP will have an unpaid interest subsidy that covers all your interest not covered by your minimum payment across all your Direct Loans, whether they are subsidized or not. However, RAP requires 30 years of payments to reach forgiveness for anyone using it.
To my knowledge, there is no provision, historically or in the recently passed legislation, which requires a borrower to repay the interest covered by the unpaid interest subsidy.
Hope that helps!
Thank you for your thoughtful reply – very helpful pointing out details I had missed!
Will unpaid interest be capitalized when switching from SAVE to PAYE? I believe I am IDR profile 2 (I was originally in PAYE and switched to SAVE when it became available which resulted in capitalization originally). When I use the simulator it says I’m only eligible for IBR 2009- my consolidated loan was done in 2018- 2017 graduate. When I go onto federal student aid it doesn’t differentiate what form of IBR I’m eligible for. I just want to make sure that the simulator is correct that I’m indeed a profile 2. Thank you
PS. When when switching from SAVE to PAYE through July 2028 these payments indeed count towards forgiveness?
Hi Taylor,
Thanks for posting!
>>>Will unpaid interest be capitalized when switching from SAVE to PAYE? I believe I am IDR profile 2 (I was originally in PAYE and switched to SAVE when it became available which resulted in capitalization originally).<<<
From an older student aid file in the My Student Loans tool that I see from you back in February, I can see that you are in IDR Profile 2, which means you are eligible to use PAYE — at least until it is eliminated on July 1, 2028.
I can also see that your unpaid interest was not capitalized since you consolidated your loans back in May 2018 and that your loans were in SAVE before the court blocked it last summer. Your principal is still the same as the amount you received when the Consolidated Loan was first received, and you have an unpaid interest balance of $21,875 as of January 2025. All of that implies that your unpaid interest was not capitalized when you moved to SAVE.
But if something has changed since January 2025, then take a look! That’s why we encourage people to upload files to the My Student Loans tool regularly — particularly when you’re reaching out to your loan servicer or considering a repayment plan change. You want to be working from the most current information available before you make those decisions!
>>>Will unpaid interest be capitalized when switching from SAVE to PAYE? I believe I am IDR profile 2 (I was originally in PAYE and switched to SAVE when it became available which resulted in capitalization originally).<<<
No, your unpaid interest will not capitalize when you switch from SAVE to PAYE.
When you say, “use the simulator”, I’m presuming you mean the federal student aid simulator? I have heard numerous reports of federal student aid incorrectly showing the repayment options you’re able to use. I really have never trusted the federal student aid simulator to know: 1) Which repayment options you’re able to use, 2) your monthly payment, or 3) your time in repayment. That means all of the simulations they show you are also possibly inaccurate.
That’s why we built the tools in the VIN Foundation Student Debt Center — to give you an objective resource to check those calculations and a way to identify issues when they come up.
>>>PS. When when switching from SAVE to PAYE through July 2028 these payments indeed count towards forgiveness?<<<
Yes. Qualifying forgiveness payments you’ve made using IBR, PAYE, REPAYE, SAVE (up to July 2024 before the court blocked it) all count towards your time to reach forgiveness.
Briefly, there was an IDR forgiveness progress widget available on the studentaid.gov dashboard. They recently took that down for folks not using IBR — although it’s missing for some of those folks too. Until they put that tool back up, your next option to check your forgiveness progress is via a studentaid.gov API:
Step 1) Log in to studentaid.gov
Step 2) Go to https://studentaid.gov/app/api/nslds/payment-counter/summary
That API data is going to look really ugly as it is not formatted well for viewing. Keep a copy of it for your records and see if the counts shown there pass the smell test for you.
And if you would like to dive deeper into your student loan details on the Student Debt Message Board area for veterinarians and veterinary students (anonymously if you prefer), please submit a secure Student Debt & Income “Signalment” form
Thank you re the clarification re capitalization and all of your help
Can you help clarify the following:
1) Yes, I was using the federal student simulator and it made it seem like I was eligible for IBR 2014 and I just want to make sure I’m understanding correctly why I am not. I am showing up as only IBR 2009 with the VIN simulator and I see that IBR 2014 is only for those whose 1st federal loan was after July 2014. Am I not eligible because my undergraduate unsubsidized loans were taken out before July 2014 even though I consolidated loans after 2014 in 2018 re vet school)?
2) Clarifying that from the months of now to July 2028 when PAYE will be no longer available these payments will also count towards forgiveness?
Thank you!
Hi Taylor,
Correct. You’re not eligble for IBR 2014 because loans you had from before July 1, 2014 were consolidated and are part of the balance you’re still repaying now.
Correct again. Payments made under PAYE will count towards your IDR forgiveness time. The only time we know that does not count towards forgiveness is the time spent in the SAVE forbearance (starting July 2024).
Trying to figure this all out. This is my wife’s loan and she still has 7 1/2 years left in the PSFL Save program. Based on an IDR, our payment would be 1,300 which is way too much. Any other ideas?
Hi Joseph,
Thanks for posting!
Here’s what I can tell you from what you included…
1) Looks to see what other IDR options your wife’s loans have. If she uploads her federal student aid file to the VIN Foundation My Student Loans tool and checks the IDR Eligibility tab, she will be able to see the remaining IDR options she has. Ideally, she would switch to PAYE if she is eligible to continue earning PSLF credit.
2) If a PSLF qualifying payment is too much, even in a plan like PAYE, then check the monthly payment calculation — IDR plan payments are designed to be a manageable monthly payment based on your taxable income. If either your or your wife’s income has decreased since you last filed a federal income tax return, then you can have the payment calculated using more current income information to get a lower monthly paymemt. It’s also possible that your monthly payment estimate is wrong. Look at the Discretionary Income calculation for IDR payments and double-check that the estimat you’re seeing is correct.
3) Remain in the SAVE forbearance until you can file a 2025 tax return and consider filing your taxes separately. With a separate tax return, your wife can have an IDR payment calculated from her income alone, which should lower the minimum monthly payment.
Hope that helps! Good luck 🙂
Hello, I have looked at moving from the SAVE plan to the PAYE plan as the stated recommendation for IDR profile 2. As I move through the application process for changing my IDR plan on the financial aid website, it says I am only eligible for the ICR plan. Do you have any comments as to why this may be? I am planning on full repayment here in the next few years, but would still like to have a IDR plan to fall back on.
Thank you in advanced, and thank you for so much informative information during these changes.
Hi Shana,
Thanks for your report. My initial thought is you’re not seeing IBR or PAYE available too you because you do not pass the “partial financial hardship” test. Both IBR and PAYE previously tested to see that your payment calculated from your income would be less than a fixed 10-year plan payment.
With your remaining balance being so low, you probably do not pass that test.
That said, the recent tax and spending bill removed the partial financial hardship test, at least for IBR. Unfortunately, the system may not yet have been updated to reflect those changes.
You could either select ICR if you wanted your payments to count towards forgiveness or you can make payments of your choosing while in the SAVE forbearance. You don’t have to leave the forbearance. And with no payment due and your plan to eliminate your balance, you could choose to pay whatever you would like to your remaining loans — maybe even targeting the higher interest rate loans first to decrease your remaining repayment costs.
Hope that helps! Good luck 😊