Major Student Loan Updates for August

It’s been a busy month in student loan land, and while some headlines feel like déjà vu, there’s plenty worth your attention. Between the end of key SAVE provisions, baffling application rejections, and another round of “we’ll get to it when we get to it” from the Department of Education (DOE), there’s no shortage of updates that could affect your strategy. Here’s the rundown on what matters now and what’s coming down the pipeline.

SAVE Interest has Ended

The biggest story this month (and something we covered last month) is that the interest subsidy provisions of the SAVE forbearance have expired. Many borrowers have been riding out SAVE only because of the 0% interest feature. To reiterate: that feature ended on August 1. If you are not pursuing PSLF, we strongly recommend switching away from SAVE ASAP. Read our dedicated blog for more details.

IDR Applications Rejected

This story demonstrates government logic at its finest, and it will certainly resonate with anyone who has ever served in the military. One of the payment plan options on the IDR form used to be: “I want my servicer to put me in the plan with the lowest monthly payment.” In most cases, SAVE was the lowest payment option.

However, since SAVE is blocked by the courts, DOE has recently announced they are rejecting practically everyone who selected that option on their IDR application instead of simply putting them into the next best plan. This impacts over 460,000 borrowers, most of whom have been in limbo for months. Now they will have to complete a new application. Love that customer service.

IDR Forgiveness Processing…Or Lack Thereof

DOE announced on July 22 that IBR forgiveness processing was paused while they update their systems. We’ve seen commentators cry foul and raise alarm over this. While it’s a pain for those who have hit their forgiveness threshold, we see it as more of a nuisance than an actual threat. Congress and DOE have reaffirmed that forgiveness under the IBR program (both old and new versions) remains completely safe for current borrowers. So, for now, we think this is a nothingburger.

Which Provisions of the OBBBA go into Effect Now vs. Later

If you’ve been following our coverage of the One Big Beautiful Bill Act, you know most of the changes kick in July 2026. But a few went into effect upon the bill being signed. One of the big ones is opening access to IBR for high-income earners. See the full breakdown here.

Student Loan Tax Benefits Extended

For those lucky enough to get some student loan help from your employer, here’s some good news: the CARES Act included a provision allowing the first $5,250 of employer-provided student loan money to be exempt from federal income taxes. This was set to expire at the end of 2025, but lawmakers tucked a provision into the OBBBA making it a permanent tax exemption.

Complaint Backlog

We’ve been covering the massive layoffs at the Department of Education. In case you missed it, the Trump administration laid off roughly half of the DOE workforce. This includes nearly two-thirds of the Ombudsmen team, which only had 63 members to begin with.

If you’re not familiar, the FSA Ombudsmen Group resolves borrower issues when your servicer (or FSA reps) can’t or won’t fix your account problems. Whether it’s your PSLF payment count being off, your payment amount being too high, or being placed on the wrong plan, they are your last line of defense. Recent reporting shows the backlog of complaints swelled to 27,000 in May, up from 16,000 in February.

Until they get caught up, we are doing our best to advocate for borrowers by calling in with them and communicating directly with their servicers and FSA reps. Knowing the language, regulations, and processes often helps us find resolutions faster. If you need an advocate, we’re happy to help.

Our Backlog

Speaking of backlogs, a huge thank you to all of you who have engaged with us the past few months. Our advisors are putting in as many hours as they can (including nights and weekends) to accommodate the consultation and refinancing requests pouring in. We appreciate your business and trust in us.

Don’t Wait Until It’s Too Late

If you’re affected by any of the changes above, or even if you’re just unsure what they mean for you, waiting could cost you money and opportunities. While we’re busy, we always make room for borrowers who are ready to take action.

Your next move could be the difference between paying thousands extra in interest or locking in a smarter, more strategic repayment plan. Let’s make sure it’s the right move.

Book your consultation today, before the next round of changes hits.