Interest is accruing on federal student loans as of 2026. The 0% interest rate and payment pause expired on September 1, 2023, with payments resuming in October 2023. Forbearance-related interest benefits ended, and interest began accruing again on eligible loans, including those in the SAVE plan as of August 2025.
For most borrowers, the primary debt relief was the suspension of (1) interest accrual and (2) the requirement that borrowers make monthly payments on their loans, both of which were available from March 13, 2020, to September 1, 2023 (the suspension period).
On Aug. 1, 2025, interest will begin accruing on federal student loans in the Saving on a Valuable Education (SAVE) Plan forbearance. This is the result of federal court injunctions.
Most student loans begin accruing interest as soon as funds are disbursed, even while the student is in school. Subsidized federal loans do not accrue interest during enrollment, but unsubsidized loans do. Interest accrues daily and capitalizes if unpaid after graduation or deferment.
The "7-year rule" for student loans generally refers to when negative marks, like defaults, are removed from your credit report (around 7 years after the first missed payment or default date for federal loans, 7.5 years for private loans), but the debt itself doesn't disappear and must be paid off; it's also a benchmark in bankruptcy proceedings where federal loans can become dischargeable after 7 years from when payments were due, though proving "undue hardship" is required and difficult.
If you repay your loans under an IDR plan, the end of term balance on your student loans may be forgiven after you make a certain number of payments over 20 or 25 years (240 or 300 monthly payments). Use Loan Simulator to compare plans, estimate monthly payment amounts, and see if you're eligible for an IDR plan.
Yes, federal student loans can be forgiven after 25 years (or 20 years for some plans/loans) through Income-Driven Repayment (IDR) plans like IBR, ICR, or SAVE, where any remaining balance after making consistent payments is forgiven, though this forgiven amount may become taxable income after 2025, while Public Service Loan Forgiveness (PSLF) offers forgiveness in just 10 years for public servants.
In June 2024, a federal court blocked parts of the SAVE Plan. As a result, borrowers enrolled had their federal student loans placed in forbearance with a zero percent interest rate. In February 2025, the Eighth Circuit Court of Appeals held that the SAVE Plan is unlawful.
If you choose to request a student loan deferment, you won't have to make principal and interest payments during your deferment period.
During his time in office, President Trump provided temporary COVID-19 relief by pausing federal student loan payments and interest, later extending it, but also signed legislation (the "Big Beautiful Bill") that capped borrowing for grad students, altered repayment options, and made Public Service Loan Forgiveness (PSLF) harder, leading to increased scrutiny and potential garnishments for defaulted loans under his administration's later actions, notes CNN, WPR, NPR, PBS, Yahoo Finance, Student Loan Borrower Assistance, and The New York Times.
Interest began accruing under this forbearance on Aug. 1, 2025. This forbearance will last until the legal situation changes or servicers are able to send bills to borrowers at the appropriate monthly amount.
Under the Student Loan Scheme we can borrow money interest-free from the government to help pay for tertiary study, and repay the loan once we finish studying and start earning over a certain amount. If we move overseas after studying, though, we get charged interest on our student loans.
As of May 24, 2024, SBA had forgiven over 10.5 million PPP loans, totaling over $750 billion, 37,938 of which (totaling approximately $4.6 billion) had an open hold code 70 (potential clawback).
When you defer, interest will continue to accrue (grow) while you're in school or in an internship, law clerkship, fellowship, or residency program, which will increase your Total Loan Cost, and you may end up paying more for your loan overall.
A $100,000 student loan is a serious financial responsibility, but understanding repayment options helps make the process manageable. On average, repayment can take 10–25 years, depending on income, interest rates and repayment plans.
Depending on your lender and loan terms interest interest may still accrue on loans even if a borrower is in a grace period or deferment. This means that by the time you start making loan payments, your loan balance could be higher than the amount you originally borrowed.
Yes, student loans can cause your tax refund to be garnished in 2025, but only if you're officially in default. Default typically means you've missed at least nine consecutive monthly payments (270 days) on Direct Loans and FFEL Program loans or missed payment deadlines on Perkins Loans.
You qualify for student loan forgiveness through specific federal programs like Public Service Loan Forgiveness (PSLF) for government/non-profit workers, Income-Driven Repayment (IDR) Forgiveness after 20-25 years, and targeted relief for defrauded students (Borrower Defense) or the totally and permanently disabled, with new Biden-era rules also helping long-term borrowers, those with significant balance growth, or those who didn't finish school. Eligibility hinges on having federal loans and meeting specific work, payment, or circumstance requirements.
Whether you should pay off student loans early depends on your financial situation, but generally, it's good if you have a solid emergency fund, high-interest debt, and don't need federal loan benefits (like forgiveness); however, it's often better to prioritize an emergency fund, retirement savings, and other high-interest debts first, especially if you have federal loans that qualify for forgiveness programs. Paying early saves interest and lowers debt-to-income (DTI), helping with future loans like mortgages, but it reduces your cash liquidity and can cost you potential tax deductions or loan forgiveness, according to Bankrate and US News Money.