The U.S. Education Department directed its federal student loan servicers to restart interest accrual on Aug. 1 for participants in the Biden-era SAVE plan. (Catherine Lane/Getty Images)

WASHINGTON — Interest accrual on the debt of nearly 7.7 million student loan borrowers enrolled in the Saving on a Valuable Education plan will resume Aug. 1, the U.S. Education Department said Wednesday.

The Biden-era income-driven repayment plan better known as SAVE saw legal challenges from several GOP-led states beginning in 2024, creating uncertainty for borrowers who were placed in an interest-free forbearance amid that legal limbo.

The SAVE plan, created in 2023, aimed to provide lower monthly loan payments for borrowers and forgive remaining debt after a certain period of time.

In February, a federal appeals court upheld a lower court injunction that blocked the SAVE plan from going into effect. The department said Wednesday that it’s instructing its federal student loan servicers to start charging interest Aug. 1 to comply with court orders.

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,” the department said in a written announcement.

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

“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,” she added.

McMahon said her department is urging borrowers under the SAVE plan to “quickly transition to a legally compliant repayment plan.”

“Borrowers in SAVE cannot access important loan benefits and cannot make progress toward loan discharge programs authorized by Congress,” she said.

‘Unnecessary interest charges’

Mike Pierce, executive director of the Student Borrower Protection Center, blasted the department’s decision in a statement Wednesday.

“Instead of fixing the broken student loan system, Secretary McMahon is choosing to drown millions of people in unnecessary interest charges and blaming unrelated court cases for her own mismanagement,” he said.

“Every day, we hear from borrowers waiting on hold with their servicer for hours, begging the government to let them out of this forbearance, and help them get back on track — instead, McMahon is choosing to jack up the cost of their student debt without giving them a way out.”

The agency has taken heat for its sweeping actions in the months since President Donald Trump took office as he and his administration look to dismantle the department.

The department is also mired in a legal challenge over some of its most significant efforts so far, including laying off more than 1,300 employees earlier this year as part of a reduction in force effort, an executive order calling on McMahon to facilitate the closure of her own agency and Trump’s proposal to transfer some services to other federal agencies. These actions have been temporarily halted in court.

Meanwhile, President Donald Trump signed a massive tax and spending cut bill into law last week, part of which forces any borrower under the SAVE plan to opt in to a different repayment plan by July 1, 2028, or be automatically placed in a new, income-based repayment plan. 

U.S. Education Secretary Linda McMahon testifies at a hearing of the U.S. Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies on June 3, 2025. (Screenshot from committee livestream)

WASHINGTON — U.S. senators from both parties pressed Education Secretary Linda McMahon on Tuesday over the Trump administration’s proposal to eliminate funding for key programs administered by the Education Department for disadvantaged and low-income students.

McMahon defended those and other sweeping changes outlined in President Donald Trump’s fiscal year 2026 budget request — which calls for $12 billion in spending cuts at the department — while testifying before the U.S. Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies to outline the president’s proposal.

Tuesday’s hearing followed the Education secretary’s testimony in front of the corresponding House panel in May. The House and Senate appropriations committees share jurisdiction over the bill to fund the department for the coming fiscal year.

McMahon said the budget request takes a “significant step” toward her and Trump’s goal “to responsibly eliminate the federal bureaucracy, cut waste and give education back to states, parents and educators.”

Senators blast move to eliminate programs

But the budget’s proposal to do away with the Federal TRIO Programs, which were funded at nearly $1.2 billion in fiscal year 2024, as well as the Gaining Early Awareness and Readiness for Undergraduate Programs, or GEAR UP, which were funded at $388 million, garnered criticism from both Republicans and Democrats on the panel.

While the Federal TRIO Programs include federal outreach and student services programs to help support students who come from disadvantaged backgrounds, GEAR UP aims to prepare low-income students for college.

Neither TRIO nor GEAR UP has “met most of its performance measures for a number of years” and states and localities are “best suited” to determine how to support the activities in the programs rather than the federal government, according to the summary of the department’s more detailed budget request.

Sen. Susan Collins, chair of the broader Senate Appropriations Committee, said she “strongly” disagrees with the budget’s proposal to cut the TRIO programs.

The Maine Republican, who co-chairs the Congressional TRIO Caucus, said she’s “seen the lives of countless first-generation and low-income students, not only in Maine, but across the country, who often face barriers to accessing a college education changed by the TRIO program.”

Sen. Shelley Moore Capito, chair of the subcommittee, echoed Collins’ concerns about cutting TRIO and GEAR UP, and encouraged her panel to reevaluate those parts of the budget request.

The West Virginia Republican said “my state, and many of our states, but mine in particular, I think, has a lot of first-time collegegoers, a lot of students that don’t have the aspirational goals either within their family, they’re not looking at how they can achieve education or a certificate or whatever, and that’s where I think these programs have been particularly useful.” 

McMahon said that while she “absolutely” agrees that there is some effectiveness in the TRIO programs, “these programs were negotiated at very tough terms in that the Department of Education has no ability to go in and look at the accountability of TRIO programs.”

“It specifically eliminates our ability to do that, and I just think that we aren’t able to see the effectiveness across the board that we would normally look to see with our federal spending,” she said.

Sen. Jeff Merkley fired back at McMahon’s claim, noting that there are benchmarks set and annual performance reports required for grantees.

“Let me just say, your argument that there’s no studies, no accountability, is just actually wrong, and the fact that you’re coming here not even having looked at your own department’s studies of these programs in order to be informed about them is profoundly troubling,” the Oregon Democrat said.

Education Department ‘responsibly winding down’

The White House released new details on the proposed budget last week, and according to a summary, the $12 billion spending cut “reflects an agency that is responsibly winding down.”

The more detailed request includes lowering nearly $1,700 from the maximum amount a student can receive annually through the Pell Grant — a government subsidy that helps low-income students pay for college.

The budget proposal also calls for consolidating 18 grant programs for K-12 education and replacing them with a $2 billion formula grant that would give states spending flexibility. The document asks for a $60 million increase to expand the number of charter schools in the country.

The proposal came as Trump has sought to dramatically redefine the federal role in education.

The administration was hit with a major setback to its education agenda in May after a federal judge in Massachusetts ordered the Education Department to reinstate the more than 1,300 employees who were gutted through a reduction in force effort.

The judge also blocked the agency from carrying out Trump’s executive order calling on McMahon to facilitate the closure of her own department and barred the department from carrying out the president’s directive to transfer the student loan portfolio and special education services out of the agency.

U.S. Education Secretary Linda McMahon testifies at a hearing of the U.S. House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies on May 21, 2025. (Screenshot from committee livestream)

WASHINGTON — U.S. Education Secretary Linda McMahon took heat from U.S. House Democrats on Wednesday over the drastic cuts and proposed changes at her federal agency in the months since President Donald Trump took office.

Democrats on a panel within the U.S. House Committee on Appropriations expressed dissatisfaction with McMahon’s education initiatives so far, as well as Trump’s fiscal year 2026 budget request released earlier this month. The request calls for $12 billion in spending cuts at the department.

McMahon appeared before the Subcommittee on Labor, Health and Human Services, Education, and Related Agencies to outline the budget request as part of the panel’s work to write the bill to fund the department for the coming fiscal year.

McMahon told the panel that the department aims to “shrink federal bureaucracy, save taxpayer money and empower states — who best know their local needs — to manage education in this country.”

“We’ve reduced a department that was overstaffed by thousands of positions, cut old contracts that were enriching private parties at taxpayer expense, suspended grants for illegal (diversity, equity and inclusion) programs and now are putting forward a budget request that reduces department funding by more than 15%,” she said.

Trump and his administration have sought to dramatically reshape the federal role in education, including an executive order calling on McMahon to facilitate the closure of her own department, the gutting of more than 1,300 employees at the agency, threats to revoke funds for schools that use DEI practices and a crackdown on “woke” higher education.

‘Disdain for public education’

Rep. Rosa DeLauro, ranking member of the full panel and the subcommittee, called McMahon’s actions at the department “lawless,” adding that they “reek of disdain for public education” and are “hurting the most vulnerable in our nation.” 

“Under your leadership of the department, hundreds of millions of dollars have been frozen, and entire programs have been terminated,” the Connecticut Democrat said. “Funding for vital research, protection of students’ civil rights and programs that support the recruitment and professional development of effective educators have been terminated.”

DeLauro also lambasted the budget’s proposal to consolidate 18 grant programs for K-12 education and replace them with a $2 billion formula grant that would give states spending flexibility.

A White House document summarizing major changes in the budget request said the consolidation would cut spending by more than $4.5 billion, a point DeLauro emphasized.

“Yet at the same time, you propose that we provide $4.5 billion less to educate our nation’s children overall,” she said. “A block grant is a cut — all of my colleagues here know that the states cannot afford to pick up the slack.”

In another exchange in the lengthy hearing, McMahon pushed back against New Jersey Democratic Rep. Bonnie Watson Coleman’s assertion that the department’s Office for Civil Rights is “being decimated.” The unit has seen significant staffing cuts as part of the department’s reduction in force effort along with the closure of several regional offices.

“Well, it isn’t being decimated,” McMahon said. “We have reduced the size of it, however, we are taking on a backlog of cases that were left over from the Biden administration and we’re working through those.”

Watson Coleman proceeded to press McMahon on why the department would reduce its resources if the agency has a backlog in addition to confronting cases that will come before it now. 

“Because we are working more efficiently in the department,” McMahon replied.

Prioritizing school choice

Meanwhile, Republicans focused largely on school choice initiatives and how McMahon and the department are prioritizing those efforts.  

The term “school choice” applies to alternative programs to a student’s assigned public school. Proponents say school choice programs are necessary for parents dissatisfied with their local public schools, though critics argue these efforts drain critical funds from school districts.

Rep. Robert Aderholt, chair of the subcommittee, said “too many schools, encouraged and facilitated by federal funding, have let things like social justice advocacy and divisive issues crowd out the focus on teaching students and the core subjects.”

“Thankfully, some states have pursued choice options for students whose traditional public schools have not served them well, including through charter schools,” the Alabama Republican said.

McMahon said increasing school choice was one of her priorities as secretary and highlighted the budget’s proposed increase of $60 million to expand the number of charter schools in the country, according to the budget request.

“The president absolutely believes, as do I, that the more choice that parents have, the better off the students are, and we’ve seen that repeatedly in different states,” she said.