Student Loan Payments Rise: Starting August 1, 2025, a lot is about to change for people who have federal student loans. The rules about interest and payments will not be the same anymore. The pause that was part of President Biden’s SAVE plan will end. So from that day, millions of borrowers will see interest start building up again on their loan balances, even if they don’t have to pay anything right away. This can really add up and make loans more expensive.
This is happening because a court stopped some parts of the SAVE plan, and the government is now moving to a different plan. This new one is called the Repayment Assistance Plan, or RAP. It’s coming in under new federal law signed by President Trump. At the same time, two other repayment plans, PAYE and ICR, are going to be removed completely by June 30, 2028. So anyone using those now should think about switching to another plan before that happens.
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Student Loan Payments Rise: What Borrowers Should Expect?
With the old interest pause ending, people with loans under SAVE will start seeing interest grow again from August 1. That means their total loan amount will slowly rise even if they’re not making payments. Experts believe over $27 billion in interest will be added to borrowers’ balances in the next year. So that’s a real cost and not just numbers on paper.
RAP is also different from SAVE when it comes to how much borrowers have to pay each month. A lot of people might have to pay way more under RAP. Some could even see their monthly bills go up by hundreds of dollars, which can be tough, especially for younger borrowers. In fact, Gen Z borrowers already pay more than others on average, they’re paying $526 each month, while the overall average is about $284. That gap could grow even more now.
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If someone is on PAYE or ICR, those plans won’t be available after mid-2028. So people on those plans should make a decision soon. A good option still available is IBR, or Income-Based Repayment.
But there’s a condition. You can only use IBR if you don’t take any new loans or combine your loans after July 1, 2026. Under IBR, most people pay 10% of the money they earn after covering basic needs. Their loans can be forgiven after 20 years, or after 15 years if they borrowed before July 1, 2014.
The Department of Education says it’s a good idea to check your repayment plan soon. They suggest using the loan simulator to see what your future payments could look like. If things get hard, you can ask your loan servicer for help like pausing payments or lowering them for some time.
