Student Loan Interest is Coming Back: Here’s What Montana Borrowers Need to Know

If you live in Montana and have student loans under the federal SAVE Plan, you’ll want to keep reading. The U.S. Department of Education announced that starting August 1, 2025, interest will start building up again on those loans. That could mean a higher balance and bigger monthly payments for thousands of borrowers across the state. So, what’s happening and what should you do about it?

The SAVE Plan Hits a Legal Roadblock

The SAVE Plan, rolled out by the Biden administration, promised things like lower monthly payments and even zero-interest balances. But courts have ruled that key parts of the plan, especially the interest pause, aren’t legal. That ruling means the Department of Education now has to start charging interest again on all loans enrolled in SAVE. The pause on interest that’s been in place will officially end on August 1, and balances will begin to grow again.

How Montana Borrowers Will Be Affected

If you’re enrolled in the SAVE Plan, this change means your federal student loans will begin to accrue interest again. Even if you're still in forbearance and not making payments, your loan balance will start rising because of the interest. When your forbearance ends, you’ll be responsible for making regular monthly payments that include both the principal and the newly added interest. For borrowers working toward loan forgiveness through programs like Public Service Loan Forgiveness, staying in SAVE could actually delay progress unless you switch to a legally approved repayment plan.

What You Should Do Now

If your loans are currently in the SAVE Plan, the Department of Education is encouraging you to move to a different repayment option that’s still legally allowed, such as the Income-Based Repayment Plan (IBR). If you don’t switch, you won’t be able to make progress toward loan forgiveness and you could be looking at a higher overall loan cost in the long run. To help make the best decision, log in to your account at StudentAid.gov and use the Loan Simulator. This tool can show you what your monthly payments might look like under different repayment plans and help you figure out which one makes the most sense for you.

Applying for a New Repayment Plan

Switching plans is pretty simple, especially if you give the Department permission to pull your tax information directly from the IRS. That step helps speed up the process and means you won’t have to manually upload any income documents. If you already submitted an application for a repayment plan like IBR, PAYE, or ICR, and selected one of those as your choice, you don’t need to reapply. Just make sure you’re not sitting in the SAVE Plan anymore, especially if you’re trying to qualify for forgiveness programs.

READ MORE: Is It Ever Legal to Pass on the Right in Montana?

More Help Is Coming, But Not Yet

There is a new repayment program on the way. It’s part of the “One Big Beautiful Bill Act,” signed into law by President Trump on July 4. The plan, called the Repayment Assistance Plan, will be available starting July 1, 2026. Until then, borrowers are being advised to enroll in the current IBR Plan. It’s a safe and legal choice that will let you continue making progress without interruption, even as other repayment options face their own legal challenges.

What’s Happening With Collections

After a long five-year break, the government officially resumed student loan collections this past May. Since then, the Department of Education has collected over $282 million from defaulted loans through voluntary payments and federal refund offsets. For now, the government hasn’t started taking monthly Social Security checks or other federal benefits, but that could change. Wage garnishments are expected to begin later this summer, so if you’ve defaulted, now is a good time to reach out and get back on track before things get more complicated.

Montana Borrowers: Don’t Wait Until It’s Too Late

This isn’t the news anyone was hoping for, especially after many borrowers signed up for SAVE under the impression that interest wouldn’t be a concern. But with the court’s decision in place, interest is coming back whether we like it or not. The best move now is to be proactive. Take a few minutes to review your loans, compare repayment options, and make a switch if you need to. Visit StudentAid.gov/courtactions for the latest info and tools.

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If you’re feeling overwhelmed, you’re not alone, but you don’t have to figure it out by yourself. Montana borrowers have options and the sooner you act, the better off you’ll be.