Student Loans for College Students Just Got a Major Update

As summer reaches its halfway point, a major update to college student loans is making waves, leaving both students and parents scrambling to understand its long-term implications. The current presidential administration has released an announcement from the U.S. Department of Education that it will restart interest accrual for borrowers with loans in the Saving on a Valuable Education (SAVE) Plan on August 1, 2025. In this blog, we will explain what this student loan update means for students moving forward and how we can assist you if you need help.

What is The Change to Student Loans?

On Wednesday, July 9th, the U.S. Department of Education released a statement informing the country that it would be restarting interest accrual for borrowers with student loans. This comes under the SAVE plan, which is an income-driven repayment (IDR) plan for federal student loans, designed to lower monthly payments based on income and family size. It was also designed to help with loan forgiveness, which was one of the goals of the last presidential administration. 

The current administration is making this change in order to form a legal repayment plan so borrowers can begin making qualifying payments, and this process would affect 7.7 million borrowers, of whom the administration will reach out to help formulate a plan to have them make the payments.

According to the official statement made by the DOE, “Borrowers in the SAVE Plan will see their loan balances grow when interest starts accruing on August 1. When the SAVE Plan forbearance ends, borrowers will be responsible for making monthly payments that include any accrued interest as well as their principal amounts.” It’s important to keep this in mind, given how close this date is to when the balances will grow.

Next Steps According to the Department of Education

The Department of Education has given a layout for what the next steps should be with this change. According to the official statement, when the forbearance ends on the SAVE plan, borrowers will be responsible for making monthly payments that include any accrued interest as well as their principal amounts.

The department encourages borrowers to use what’s called the Loan Simulator to help find the best options for repayment plans and if they are eligible for it. With this in mind, we personally recommend you get in touch with your loan provider to also figure out what the next best steps are. Given their connection to the school they will give insight in to what they may also change with school policy. 

Why It’s Best to Form a Plan and What We Can Do to Help

This is why parents strategizing and formulating a plan for their kids BEFORE college is your best bet! We lay it out through the 12 mistakes you must avoid, and the #1 on the list is not having a plan. Financials are maybe the most important aspect of college, and so that’s what makes it the perfect number 1 mistake to avoid. We mention that a lot of this can contribute to a bad educational experience with your major and classes, but financially, it’s an even bigger deal, especially if you pay a lot for an academic focus, change that or end up changing schools to fit what you’re looking for.

The #2 mistake is procrastinating about planning and starting too late with what your plans are. If you’re a first-time student ready to start college life, with this new change to student loans, planning out how you will spend your money has become an even bigger deal to prioritize. 

At Send Your Kids to College, we have the tools you need in order to get help and plan it out in the best way possible. One of our best solutions is called FAFSA, or Free Application for Federal Student Aid, which is a form that determines your eligibility for federal financial aid to help pay for college or career school. It works for grants, loans, and work-study programs. As of 2025-2026 we have updated FAFSA with a new version for people here in WNY, where we are implementing a beta test program for people who sign up. We can’t recommend enough that you sign up for this even if you aren’t fully in need of it. Call or email with any questions!