Nearly 7.7 million student loan borrowers within a Biden-era repayment plan will begin to see interest accrue once again on their student loans, the U.S. Department of Education announced Wednesday.

Borrowers within the Saving on a Valuable Education (SAVE) Plan will see interest accruement begin on Aug. 1, a move the department says is intended to comply with a federal injunction.

“For years, the Biden Administration used so-called ‘loan forgiveness’ promises to win votes, but federal courts repeatedly ruled that those actions were unlawful,” said U.S. Secretary of Education Linda McMahon. “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.”

The department is urging all SAVE Plan borrowers to “quickly transition to a legally compliant repayment plan – such as the Income-Based Repayment Plan,” McMahon continued. She stated those under the Biden-era repayment plan will not be able to “access important loan benefits and cannot make progress toward loan discharge programs.”

The department will begin direct outreach to affected borrowers with instructions on moving to a different repayment plan on Thursday. Retroactive interest will not be added to the loans, DOE said.

The SAVE Plan, designed to be a more affordable income-driven repayment plan offering loan forgiveness to some, was initially put into place after the Biden administration’s federal student loan forgiveness program was struck down by the Supreme Court in June 2023.

In June 2024, a federal court blocked parts of the SAVE Plan, leaving borrowers on the plan in forbearance accruing zero interest during the legal challenge. Another federal district court injunction in April struck down the SAVE Plan, though it did not state the interest forbearance was illegal.

The Department of Education said they will restart interest accrual to comply with the April ruling.

The Student Borrower Protection Center estimated the typical borrower will now face $300 per month in interest charges following this policy change.

SBPC executive director Mike Pierce said the Education Secretary is “blaming unrelated court cases for her own mismanagement,” noting borrowers have been “begging the government to let them out of this forbearance and help them get back on track.”

“These are teachers, nurses, and retail workers who trusted the government’s word, only to get sucker-punched by bills that will now cost them hundreds more every month,” Pierce said. “McMahon is turning a lifeline into a trap and fueling one of the biggest wealth grabs from working families in modern history.”

The DOE encouraged borrowers to use the “Loan Simulator” to analyze and choose from available repayment plans. Those who have not yet submitted an Income-Driven Repayment (IDR) plan application were also urged to do so.

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As of April, a court order found the department had a backlog of about 2 million IDR applications. About 80,000 had been processed in the month of April, the report found. DOE said Wednesday they continue to “make progress on the backlog,” and borrowers submitting an application can “expect quick and timely processing.”

The interest announcement Wednesday comes days after the president signed the One Big Beautiful Bill Act, restricting enrollment in student loan payment programs Pay As You Earn and Income-Contingent Repayment. The bill includes a new Repayment Assistance Plan available to borrowers in July 2026, which will overhaul the IDR plans available to borrowers.