The U.S. Department of Education is set to restart interest accrual on federal student loans under the Saving on a Valuable Education (SAVE) Plan starting Aug. 1.
The move follows a federal court injunction that blocked the implementation of the SAVE Plan, which had previously allowed borrowers to maintain a zero percent interest rate.
The Education Department is now urging borrowers to switch to a legal repayment plan, such as the Income-Based Repayment Plan, to continue making qualifying payments.
Earlier this month, the department said it had plans to reach out to approximately 7.7 million borrowers enrolled in the SAVE Plan to provide guidance on transitioning to different repayment options.
The move comes after multiple federal court rulings deemed certain aspects of the SAVE Plan unlawful, including the zero percent interest rate status, the Education Department said.
Borrowers are encouraged to use the Loan Simulator available on StudentAid.gov to compare repayment plans and determine the best option for their financial situation.