Today, after a year-long pause, interest resumed on student loans enrolled in the Saving on a Valuable Education (SAVE) plan.
Launched by the Biden administration in 2023, SAVE was intended to give borrowers an affordable path to repaying student loans. But it’s been in limbo since last summer, when federal courts blocked it in response to a lawsuit from GOP state attorneys general. Since then, the loans have remained in forbearance.
SAVE will officially end in July 2028, as part of a larger overhaul of the government’s student loan program that includes ending new applications for the Income-Contingent Repayment (ICR) Plan and the Pay As You Earn (PAYE) Plan.
The ongoing adjustments have confused many borrowers. In July, the Department of Education paused forgiveness through the income-based repayment plan, claiming it was updating its systems. (Applications are still being accepted.)
“It’s a lot of scrambling, frankly, and just uncertainty overall,” according to Rafael Melendez, managing partner of San Diego’s Next Gen Financial Planners. He encourages borrowers to visit the Federal Student Aid website for the latest updates.
But the 7.7 million borrowers on SAVE should start making payments or change plans now, he added, or they could be paying thousands more in compound interest.
“Let’s say you’ve got a loan balance of $100,000 with a 7% rate, which isn’t uncommon for some people who went to grad school,” Melendez told CNBC Select. “After two years, that could mean an additional $15,000 if no payments were made.”
Some could see their monthly bills more than double.
If you’re currently on the SAVE plan, Melendez said, see if it’s better to switch plans now, refinance or continue with the SAVE plan until the 2028 drop-off point.
“Calculate the results for each strategy,” he added. “In which scenario are you going to pay the least over the lifetime of the loan? Optimize for that path.”
Secure a lower monthly payment or better rate with these student loan options.
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Undergraduate and graduate students, parents, health professionals
$5,000 minimum (or up to state); maximum up to cost of attendance
5, 7, 10, 15, years; up to 20 years for refinancing loans
1. Make interest-only payments
If you can’t afford full student loan payments right now, Megan Walter, senior policy analyst at the National Association of Financial Aid Administrators, says staying on SAVE while forbearance is in effect is a valid option.
“If you know it’s going to really financially hurt you to start making payments, then just stay in the forbearance,” she explained. “If you can at least pay the interest, I would do that.”
Keep in mind, this is only a temporary measure: All SAVE borrowers must change plans by July 2028 or be automatically placed in the still-gestating Repayment Assistance Plan (RAP).
2. Switch to the income-based repayment plan
Melendez says that, even without SAVE, federal student loan forgiveness is still on the table.
Like SAVE, the income-based repayment plan uses your salary to determine the size of your payments and provides a pathway to forgiveness. With IBR, borrowers pay up to 10% of their discretionary income each month, and after 20 years, any remaining balance is forgiven.
How monthly IBR payments are calculated
IBR borrowers are required to pay up to 10% of their discretionary income each month to stay out of default.
Federal Student Aid (FSA) calculates discretionary income for IBR as the difference between your annual salary and 150% of the U.S. Department of Health and Human Services’ poverty guideline.
For a family of four in the contiguous U.S., the poverty limit is $32,150. (Alaska and Hawaii have slightly higher thresholds.)
If that household’s income is $100,000, 150% of the poverty limit would be $39,975, and their discretionary income would be $60,025. That means they could owe up to about $500 a month or $6,000 a year in student loans.
If they were paying off $200,000 in loans and made regular payments for 20 years, they’d be able to have $80,000 forgiven by the DoE.
3. Refinance your loans
Another option after exiting the SAVE program is refinancing with a private student loan. Experts warn about losing access to the hardship protections federal loans come with, but it could be the right move if you’re in a good financial position.
Federal student loan rates are fixed annually. For the academic year 2025-2026, the rate is 6.39% for undergraduate loans, 7.94% for unsubsidized graduate or professional loans and 8.94% for PLUS loans.
A working adult with a 720 credit score could earn a rate of as low as 4.30% with a private lender.
You’ll also have more options for repayment terms: The standard term on a federal student loan is 10 years, but private lenders have options ranging from 5 to 30 years.
Two of our top picks for private student loan refinancing are Earnest, which has lower rates than many competitors, and Citizens Bank, which offers a 0.50% rate discount for customers who enroll in autopay.
Earnest
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Eligible borrowers
Undergraduate and graduate students, parents, half-time students, international and DACA students
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Loan amounts
$1,000 minimum (or up to state) for new loans, $5,000 minimum for refinance; maximum up to cost of attendance for new loans, $550,000 for refinance loans
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Loan terms
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Loan types
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Borrower protections
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Co-signer required?
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Offer student loan refinancing?
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.24% APR to 10.74% APR (excludes 0.25% Auto Pay discount). Variable rates range from 6.13% APR to 10.74% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.
Citizens™ Student Loans
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APR
3.24% to 14.99% APR with autopay discount (Undergraduate New Loan). Other rates and loan types are available. Visit Citizen’s website for full details.
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Loan types
Undergraduate, graduate, parent loans, Master’s degrees, MBAs, law school, medical school and dental school loans.
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Loan amounts
Minimum is $1,000; Maximum amount depends on the type of degree (graduate or undergrad, MBA, Law and Healthcare)
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Loan terms
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Borrower protections
Up to 12 months of forbearance
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Co-signer required?
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Offer student loan refinancing?
Refinancing isn’t for everyone, though. If your loans switch from federal to private, you’ll automatically lose access to income-driven repayment plans and any future student loan forgiveness.
Some private lenders do offer hardship assistance, like deferment in the case of unemployment or financial difficulties. Be sure to inquire about your options before signing a contract.
Student loan FAQs
Are loans in the SAVE plan accruing interest?
After a one-year pause, interest charges on SAVE loans resumed on Aug. 1, 2025.
Is the SAVE plan going away?
Yes, the Trump administration announced that SAVE will be eliminated in July 2028. Borrowers who haven’t changed plans by then will automatically be moved to the Repayment Assistant Plan (RAP).
Do student loans affect your credit score?
Yes, missed or late student loan payments will negatively impact your credit score, just like any other debt, depending on how they are managed. On the positive side, having student loans can help you build a positive credit history and diversify your credit mix, which can improve your score over time if payments are made on time. However, missed or late payments can significantly damage your credit score and stay on your credit report for up to seven years.
Is refinancing a federal student loan a good idea?
If you refinance a federal loan, you’ll lose access to certain forbearance, forgiveness and bankruptcy protections. Unless you have a private lender with a significantly lower rate and you’re confident about your finances and job security, refinancing can be very risky.
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Meet our experts
At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Rafael Melendez, managing partner of San Diego’s Next Gen Financial Planners. A certified financial planner, Melendez says his mission is to help educate clients on their financial options and be their trusted resource for all of life’s changes
We also interviewed Megan Walter, senior policy analyst at the National Association of Financial Aid Administrators.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties and we pride ourselves on our journalistic standards and ethics.
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