Student Loan Borrowers: How will new federal laws affect my Income-Driven Repayment Plan?

Are you curious about your student loans and need expert guidance? Submit your questions to our Student Loan Ombudsperson, Celina Damian. She responds to all student loan borrower inquiries, answering some of them here. Visit our Student Loans page to contact Celina.

Since our update in December, student loan borrowers are still facing uncertainties about their student loans. Many borrowers may be awaiting news about their Saving on a Valuable Education (SAVE) forbearance status, Income-Driven Repayment (IDR) applications, Public Service Loan Forgiveness (PSLF) Buyback, or other requests. Borrowers in default may be concerned about how the restart of the Treasury Offset Program (TOP) may affect them. DFPI is here to help answer those questions and has resources ready to assist you.

SAVE Plan Interest Accrual Restart

On July 9, the U.S. Department of Education (ED) announced it will be restarting interest accrual for borrowers with loans in the SAVE Plan on August 1, 2025. Borrowers in the SAVE Plan who were in forbearance will see their loan balances grow when interest starts accruing. They will also be responsible for making monthly payments that will include accrued interest in addition to their principal amounts.

SAVE Plan Next Steps

• ED will reach out directly to borrowers enrolled in the SAVE Plan with instructions on how to move to a different repayment plan and begin qualifying payments. To compare available repayment plans, use the Loan Simulator to determine which option best meets your needs.
• SAVE Plan borrowers working toward loan discharges, like PSLF, must switch out of the SAVE Plan to an alternative IDR repayment plan to start making qualifying payments.
• On July 4, the One Big Beautiful Bill Act was signed into law, which includes a new income-based Repayment Assistance Plan that will be available to borrowers by July 1, 2026. The law will also restrict future enrollment in the Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) Plans. As a result, ED urges SAVE borrowers to consider enrolling in the Income-Based Repayment (IBR) Plan authorized under the Higher Education Act until the Department can launch the Repayment Assistance Plan.

Other IDR Plans

• Borrowers who previously submitted an IDR application and selected the Income-Based Repayment (IBR), Pay As You Earn (PAYE), or Income-Contingent Repayment (ICR) plans do not need to submit a new application.
• Borrowers should start to see some movement on the processing of their IDR applications. Once the servicer accepts your application, it has sixty days to process it. During those sixty days, you will be placed on a processing forbearance which is interest accruing but counts towards PSLF or IDR forgiveness. If the application is not processed within sixty days, you will be placed back on forbearance.
• If you have questions about the status of your application, contact your servicer. In some cases, it may be necessary to submit a new application. If you are awaiting IDR forgiveness, please note that all IDR processing has been paused due to the SAVE injunction.

PSLF Plan

• PSLF processing and buy back requests are managed directly by the Department of Education (ED), not your loan servicer.
• Borrowers in PSLF should continue submitting their Employment Certification Forms (ECF).
• Those that have 120 months of qualified employment but have months of forbearance that are not PSLF eligible, can submit a PSLF Buy Back Request as processing of those requests has restarted.

Borrowers in Default

• ED will reach out directly to borrowers in default to provide repayment options. If you are in delinquency or have not paid your loans in over 30 days, contact your loan servicer for options. Being in forbearance, deferment, or if your payment is $0, you are not considered in default.
• If you are a borrower that is in default, be aware that ED has restarted the collections on defaulted loans through the TOP program. This means that the federal government can intercept payments such as tax refunds, Social Security, or other federal benefits. Currently, the social security offset is paused.
• Wage garnishment will also begin this summer. It is extremely important that you confirm the status of your loans by checking Federal Student Aid and your credit report.

Confused?

The Student Loan Empowerment Network offers tools to help you manage your loans, including a FAQ page and video guidance series. You can also request free one-on-one support from one of its counselors.

As always, make sure your contact information is updated with Federal Student Aid and your servicer and be aware of scams and fraud.