July 15, 2025

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 judges blocked the 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 McMahon announced that 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 the Higher Education Act to 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 the Save Our Schools campaign in a coordinated effort to fight back against President Trump’s attempts to abolish the Department of Education:

  • On July 14, 2025, Senator Warren joined a letter to the director of the Office of Management and Budget, Russ Vought, and the Department of Education Secretary, Linda McMahon, demanding that the department stop blocking nearly $7 billion in funds for K-12 schools, including for afterschool programs. 
  • On July 3, 2025, Senator Warren led her colleagues in submitting an amicus brief for NAACP v. US, arguing to the United States District Court District of Maryland that President Trump’s attempts to dismantle the Department of Education (ED) violate separation of powers and lack constitutional authority.
  • On June 10, 2025, Senator Warren met with Secretary of Education Linda McMahon and delivered over 1,000 letters to McMahon that the senator had received from people in all 50 states who were worried about the Secretary’s efforts to dismantle ED.
  • On June 9, 2025, Senator Warren led her colleagues in pushing the Acting Inspector General of ED to open an investigation into new information obtained by her office, revealing that DOGE may have gained access to two FSA internal systems, in addition to sensitive borrower data.
  • On May 20, 2025, Senator Warren and 27 other senators pushed for full funding for the Office of Federal Student Aid.
  • On May 14, 2025, Senator Warren led a Senate forum entitled “Stealing the American Dream: How Trump and Republicans Are Raising Education Costs for Families,” highlighting the consequences of Secretary Linda McMahon’s reckless dismantling of the Department of Education (ED) and President Trump’s “big, beautiful bill” for working- and middle-class students and borrowers.
  • On May 13, 2025, Senator Warren agreed to meet with Education Secretary Linda McMahon and promised to bring questions and stories from Americans across the country to highlight how the Trump administration’s attacks on education are hurting American families.
  • On May 6, 2025, Senator Elizabeth Warren highlighted the consequences of President Trump and Secretary Linda McMahon’s reckless dismantling of the Department of Education for American families in a Senate forum.
  • On April 24, 2025, Senator Warren launched a new investigation into the harms of President Trump’s attacks on the Department of Education, seeking information on the impact of the Trump administration’s actions from the members of twelve leading organizations representing schools, parents, teachers, students, borrowers, and researchers.
  • On April 10, 2025, following a request led by Senator Warren, the Department of Education’s Acting Inspector General agreed to open an investigation into the Trump administration’s attempts to dismantle the Department of Education.
  • On April 2, 2025, Senators Elizabeth Warren and Mazie Hirono, along with Senate Democratic Leader Chuck Schumer, sent a letter to Secretary of Education Linda McMahon regarding the Department of Government Efficiency’s proposed plan to replace the Department of Education’s federal student aid call centers with generative artificial intelligence chatbots.
  • On April 2, 2025, Senator Elizabeth Warren launched the Save Our Schools campaign to fight back against the Trump administration’s efforts to dismantle the Department of Education (ED) and highlight the consequences for every student and public school in America.
  • On March 27, 2025, Senator Elizabeth Warren (D-Mass.) led a letter to Acting Department of Education Inspector General (IG) René Rocque requesting that the IG conduct an investigation of the Trump Administration’s attempts to dismantle the Department of Education.
  • On March 20, 2025, Senators Elizabeth Warren and Bernie Sanders led a letter to Secretary of Education Linda McMahon regarding the Trump Administration’s decision to slash the capacity of Federal Student Aid to handle student aid complaints.
  • On February 24, 2025, in a response to Senator Warren, Secretary McMahon gave her first public admission that she “wholeheartedly” agreed with Trump’s plans to abolish the Department of Education.
  • On February 11, 2025, Senators Elizabeth Warren and Andy Kim sent Linda McMahon, Secretary-Designate for the U.S. Department of Education, a 12-page letter with 65 questions on McMahon's policy views in advance of her nomination hearing.

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