8M borrowers own up to charges after Trump admin ends illegal zero-interest student loans

Almost 8 million student loan borrowers who were left hanging by the Biden administration will see changes in the status of their “loan forgiveness.”

U.S. Secretary of Education Linda McMahon announced a return to “fiscal responsibility” as the Trump administration plans to resume interest charges on those loans.

“For years, the Biden Administration used so-called ‘loan forgiveness’ promises to win votes, but federal courts repeatedly ruled that those actions were unlawful. Congress designed these programs to ensure that borrowers repay their loans, yet the Biden Administration tried to illegally force taxpayers to foot the bill instead,” McMahon said in a statement.

.@usedgov is ending the Biden Administration’s illegal zero-interest student loan policy for SAVE borrowers on August 1.

We will support borrowers in selecting a legal repayment plan that best fits their needs.

Visit https://t.co/jzxyqF5Ikn for more information.…

— Secretary Linda McMahon (@EDSecMcMahon) July 9, 2025

“Since day one of the Trump Administration, we’ve focused on strengthening the student loan portfolio and simplifying repayment to better serve borrowers,” the secretary said. “As part of this effort, the Department urges all borrowers in the SAVE Plan to quickly transition to a legally compliant repayment plan, such as the Income-Based Repayment Plan. Borrowers in SAVE cannot access important loan benefits and cannot make progress toward loan discharge programs authorized by Congress.”

On Wednesday, the Department of Education announced it “will take an additional step to bring fiscal responsibility to the federal student loan portfolio by restarting interest accrual for borrowers with loans in the illegal Saving on a Valuable Education (SAVE) Plan on August 1, 2025.”

As part of a federal court injunction, borrowers in the illegal SAVE Plan will begin accruing interest on August 1.

The Trump Administration will support SAVE borrowers in selecting legal repayment plans that fit their needs & protect American taxpayers. https://t.co/EVF0x4ByMX pic.twitter.com/kHu4SSVrOJ

— U.S. Department of Education (@usedgov) July 9, 2025

“The Department will take this action to comply with a federal court injunction that has blocked implementation of the SAVE Plan, including the Department’s action to put SAVE borrowers in a zero percent interest rate status,” the press release reads.

“The Trump Administration will support borrowers in selecting a new, legal repayment plan that best fits their needs and helps them get on a sustainable financial path while protecting American taxpayers,” it continued, adding that the Education Department will “begin direct outreach to the nearly 7.7 million borrowers enrolled in the SAVE Plan, with instructions on how to move to a legal repayment plan so borrowers can begin making qualifying payments.”

The One Big Beautiful Bill Act that President Donald Trump signed into law last week includes an income-based Repayment Assistance Plan that will become available by July 1, 2026.

The Department noted that as of June, it has received nearly $282 million in collections on defaulted student loans. This has come via voluntary payments as well as the Offset program by the U.S. Department of the Treasury.

Senior Staff Writer
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Originally from New York, Powers graduated from New York University and eventually made her way to sunny South Florida where she has been writing for the BizPacReview team since 2015.

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