The Trump administration is officially hitting the reset button on student loan interest, and it’s putting the blame squarely on former President Biden’s failed promises.
Education Secretary Linda McMahon announced Wednesday that interest charges on federal student loans will resume August 1st, 2025, for nearly 8 million borrowers enrolled in the controversial SAVE Plan. McMahon called the plan “illegal” and said Biden’s attempts at loan forgiveness were nothing more than empty campaign promises that couldn’t hold up in court.
“For years, the Biden Administration used so-called loan forgiveness promises to win votes,” McMahon said in a statement. “Federal courts shut it down, and now we’re left fixing the mess.”
McMahon urged borrowers currently in the SAVE Plan to transition immediately to legally recognized repayment options like the Income-Based Repayment (IBR) Plan. The Department of Education warned that staying in the SAVE Plan could block borrowers from key benefits and delay progress toward loan discharge.
Borrowers will receive direct outreach starting Thursday, with nearly 7.7 million individuals being guided on how to make the switch.
The Trump administration is reasserting control over the federal student loan system and pulling back on what it calls Biden’s unlawful approach. Borrowers have less than a month to prepare for the financial shift, or risk being hit hard once interest starts ticking again.
