Warren, Schumer, Sanders Urge ED Secretary McMahon to Reverse Interest Hike on Student Loan Borrowers Amid Rising Costs

ED will increase the student loan balances of eight million Americans by $300/month on average.
Senators: “You should immediately reverse this policy so that millions of borrowers are not forced to pay billions of dollars in unnecessary interest charges.”
Text of Letter (PDF)
Washington, D.C.— U.S. Senator Elizabeth Warren (D-Mass.), Senate Minority Leader Chuck Schumer (D-N.Y.), and Senator Bernie Sanders (I-Vt.), Ranking Member of the Senate Committee on Health, Education, Labor and Pensions, sent a letter to Secretary of Education Linda McMahon, urging the Department of Education (ED) to immediately reverse its recent decision to resume charging interest to the nearly eight million student loan borrowers currently in a forbearance after enrolling in the Saving on a Valuable Education (SAVE) plan.
“This decision will be devastating for millions of American families,”wrote the senators.“The average borrower enrolled in SAVE will be charged hundreds of dollars in interest each month, amounting to over $27 billion in unnecessary costs placed on borrowers across the country over the next year alone.”
SAVE is an income-driven repayment (IDR) plan designed by the Biden Administration to make federal student loan payments significantly more affordable for millions of borrowers, which would have cut many borrowers’ monthly payments in half. Last year, as a result of litigation pursued by Republican state attorneys general, Republican-appointed judgesblockedthe implementation of the SAVE plan, forcing the eight million borrowers who had already enrolled in SAVE into a forbearance. In response, the Biden Administration implemented a safeguard that prevented these borrowers from accruing interest during the pause.
On July 9, 2025, Secretary McMahonannouncedthat borrowers in the SAVE forbearance would begin accruing interest again. The decision came despite a backlog of 1.5 million unprocessed IDR applications, meaning that SAVE borrowers will likely be unable to switch to another IDR plan that would allow them to make progress toward debt relief. Instead, they will be stuck in forbearance with no way to avoid accumulating interest. And once the forbearance period ends, many of these borrowers’ monthly payments will be higher due to the extra interest charges that will have accumulated and compounded over time.
ED’s new policy appears to be based on a false premise. The press release announcing the new policy claimed that it was required by a court order. But no court has told ED to resume charging interest, and the Administration has the legal right under theHigher Education Actto pause interest payments for borrowers in the SAVE forbearance. In fact, courts have even cited the interest-free forbearance as justification for continuing to temporarily suspend SAVE while litigation is ongoing.
“It defies logic and the law that a months-old preliminary injunction against SAVE, which makes no mention of the interest-free forbearance, requires you to start charging interest to millions of borrowers in forbearance now,”wrote the senators. “You should immediately reverse this policy so that millions of borrowers are not forced to pay billions of dollars in unnecessary interest charges.”
Due to the impacts this policy will have on millions of student loan borrowers, the senators demanded Secretary McMahon answer their questions about this new policy and the staggering IDR application backlog by July 28, 2025:
“Under your leadership, ED has continuously failed student loan borrowers, jacking up costs and ripping up consumer protections,”concluded the senators.“This new policy is another example of the Trump Administration’s deliberate disregard for the millions of Americans shouldering student loan debt across the country.”
Senator Warren launched theSave Our Schoolscampaign in a coordinated effort to fight back against President Trump’s attempts to abolish the Department of Education:
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