Policy & Legislation 3 min

Student Loan Forgiveness Delayed, Interest Resumes: What Advisors Must Know in August 2025

IBR Forgiveness Stalls—What Borrowers Need to Know

Updated on June 25, 2026 Published July 30, 2025

Millions of borrowers are stuck in limbo with rising balances and delayed relief as new changes take hold. IBR forgiveness is paused, SAVE Plan interest resumes August 1, and processing delays are piling up. Advisors need to act now to reassess repayment strategies and protect client progress. Finology Software makes it easy to identify impacted borrowers, model alternatives, and deliver clear, proactive guidance.

Student loan forgiveness under the Income-Based Repayment (IBR) plan has hit an unexpected roadblock. The Department of Education has paused forgiveness processing under IBR, despite the program being established law and not directly impacted by recent court rulings.

This sudden halt affects borrowers who have faithfully made payments for 20 or 25 years and expected debt cancellation. Instead, they’re left in limbo – either continuing payments or being forced into forbearance, where interest accrues and balances rise.

To make matters worse, the Department is also juggling a backlog of over 1.5 million repayment plan applications as it prepares to phase out most existing plans in favor of a new option that delays forgiveness until 30 years of repayment.

Client Action: Review which of your clients are enrolled in IBR or other Income-Driven Repayment (IDR) plans and notify them of this development. Be prepared to discuss temporary forbearance risks and long-term strategy adjustments.

Use the Tool: The Finology Software IDR Comparison Tool helps you evaluate current and alternative repayment options for each client based on their file.

Interest Resumes August 1st for SAVE Plan Borrowers

Millions of borrowers on the Saving on a Valuable Education (SAVE) Plan will see interest charges resume August 1, following a legal ruling that blocked core provisions of the plan.

SAVE was designed to cap payments based on income and create a clearer path to forgiveness. But for the past year, due to court challenges, borrowers were stuck in a frozen state, unable to make payments and assured that interest would remain paused.

That changes now.

With just weeks’ notice, interest will begin accruing again, and many borrowers are left scrambling. Switching to another IDR plan requires an application and with limited Department staff, processing delays continue.

Client Action: Alert clients on SAVE or considering SAVE. Review their current repayment plan and explore alternatives before interest begins compounding again.

Use Finology Software: Upload clients’ NSLDS files into Finology Software to simulate new payment paths, forecast interest growth, and develop an optimized repayment strategy.

Feature Spotlight: The Finology Software Dashboard

At the heart of the Finology platform is a consolidated dashboard that pulls together all of your client’s debt:

Student loans
Mortgages
Auto loans
Credit cards
Medical debt

This unified view makes it simple to assess monthly obligations and long-term financial pressure across all areas. By starting with student debt optimization, advisors can create a clear plan that improves total household finances.