You enrolled in the SAVE Plan because your balance was not supposed to grow from unpaid interest as long as you made your required monthly payments. Then courts blocked the plan in 2024, and SAVE borrowers were placed into an administrative forbearance with a confirmed 0% interest rate. Your balance still should not have been increasing. If your MOHELA account shows interest accrued during either period, the question is whether the accrual was accurate, and in documented cases, it was not.

The SAVE Plan Interest Benefit and Your Balance

SAVE’s Interest Subsidy: Your Balance Was Not Supposed to Grow

The SAVE Plan, established under 34 CFR § 685.209, included an interest benefit broader than what prior income-driven repayment plans offered. Per 34 CFR § 685.209(h)(1), during all periods of repayment under the SAVE plan, the Secretary does not charge the borrower’s account for any accrued interest the monthly payment does not cover. Per StudentAid.gov’s SAVE Plan documentation, this applied to both subsidized and unsubsidized loans for all periods of repayment, unlike IBR and PAYE, which waive unpaid interest only on subsidized loans for the first three years. A borrower who made every required SAVE payment on time and still saw their balance increase from interest has an account that does not reflect how the plan was designed to work.

MOHELA Calculates Daily Interest on Your Loans

Federal student loans are daily interest loans. MOHELA calculates interest by multiplying your unpaid principal balance by your annual interest rate and dividing by the number of days in the year, per MOHELA’s Student Loan Interest page. To illustrate with round numbers: a $35,000 balance at 6.5% produces approximately $6.23 in interest per day and roughly $2,274 over 12 months. MOHELA’s Interest Estimator tool, found under Tools and Requests in your borrower portal, applies your specific current balance and rate to produce your exact daily figure.

Under the SAVE interest subsidy, any daily interest your monthly payment did not cover was not supposed to be charged to your account at all. A balance growing past your required payment amount signals the subsidy was not applied correctly.

SAVE Forbearance Interest: Your Account Should Have Shown

Active SAVE Repayment: October 2023 to July 2024

Federal student loan payments resumed in October 2023 after the pandemic payment pause ended. For borrowers enrolled in SAVE and making required monthly payments during this period, the principal balance should not have grown from interest. If your MOHELA Account History shows interest accruing beyond what your required payment covered during months when your payments were current, your account was not reflecting the SAVE interest subsidy correctly.

SAVE Litigation Forbearance: August 2024 to July 2025

After courts blocked the SAVE Plan in summer 2024, SAVE borrowers were placed into an administrative forbearance. Per the Department of Education’s confirmed policy for this period, no monthly payments were required and loans were held at a 0% interest rate, meaning interest should not have accrued at all regardless of whether you made payments. MOHELA’s own portal reflected 0% for borrowers in the SAVE forbearance during this period.

In certain cases, MOHELA told borrowers their loans were in a different type of forbearance, which affected whether the 0% interest rate applied to their account.

MOHELA’s June 2025 Notices Contradicted the Zero-Interest Policy

In June 2025, MOHELA sent mass notices to millions of SAVE forbearance borrowers stating “interest continues to accrue on your loan(s) during the forbearance period.” The notices also suggested borrowers make payments on accrued interest, despite no payment being due and no interest being supposed to accrue.

MOHELA issued a clarifying statement on its website after the notices generated widespread confusion: “If you recently received an interest notice for your student loan account, please know that this is not a bill, and no action is necessary at this time. For borrowers on the SAVE administrative forbearance, interest is currently set at 0%.” An Education Department spokesperson reiterated that borrowers enrolled in the SAVE Plan remained in a forbearance not accruing interest.

One borrower’s records, verified against both MOHELA’s portal and StudentAid.gov, reflected approximately $3,000 added to her balance during a period when the rate should have been 0%. Borrowers who reported actual interest accrual on their accounts were told by MOHELA the error would be corrected when the forbearance ended.

After August 1, 2025: Interest Restarted, But Earlier Errors Did Not Reset

In August 2025, the Trump administration resumed charging interest on SAVE forbearance loans, citing subsequent court rulings that called into question the interest benefits associated with the repayment program, per Forbes reporting. Interest accruing from August 1, 2025 forward is prospective and expected. A borrower whose balance was already inflated by interest that should not have accrued during either earlier period now has that inflated balance as the starting point for new daily interest calculations. MOHELA’s daily formula applies the annual rate to the unpaid principal balance, so a balance $3,000 higher than it should be produces higher daily charges than the correct balance would, and that gap grows with each passing day.

In February 2026, MOHELA began sending notices to affected borrowers confirming balance reductions. “There was a period of time eligible loans qualified for a 0% interest rate,” the notice read. “We recently performed a review of your account and have made adjustments to your account balance based on your SAVE forbearance and the 0% interest accrual. No action is required by you as this adjustment is now complete.” Not all affected borrowers received corrections, and borrowers whose balances were adjusted may still carry inflated figures on credit reports if MOHELA furnished the higher balance to credit bureaus before the correction and failed to update the reporting.

Reading Your MOHELA Account to Verify SAVE Interest Accrual

Your Account History: a Transaction-Level Record of Every Interest Entry

Every interest entry, capitalization event, and balance change in your MOHELA account is recorded in Account History, accessible after logging into mohela.studentaid.gov. The history shows the date, type, and dollar amount of each transaction. For the active SAVE payment period, look for interest charges posted during months when your payments were current. For the forbearance period, look for any interest entries posted between August 2024 and July 2025 — a period when your account should have reflected 0% and no accrual. Dates and dollar amounts from Account History are the specific documentation needed to identify and describe a discrepancy in any dispute.

Cross-Referencing Your Account Against StudentAid.gov

StudentAid.gov maintains an independent record of your loan balance and payment history under “My Aid,” separate from MOHELA’s portal. A borrower who sees a discrepancy in MOHELA’s Account History can compare against the StudentAid.gov record for the same dates. If the two records show different balances for the same period, that discrepancy is documented evidence of a potential account error. The Interest Estimator in your MOHELA portal calculates the expected daily accrual based on your current balance and rate. Comparing that figure against what Account History shows was charged during the SAVE forbearance period identifies whether the amount accrued matches what a 0% account should have produced.

Accrued Interest, Capitalization, and Your Current Balance

Accrued Interest and Capitalized Interest Are Not the Same Line Item

Accrued interest builds as a separate running total alongside your principal while forbearance is active. Capitalization is when accrued interest is added to the principal balance, causing future interest to be calculated against a larger number.

A federal rule change effective July 1, 2023 eliminated capitalization upon forbearance exit for Direct Loans and federally held FFEL Program loans, per final regulations published in the Federal Register on November 1, 2022 and codified at 34 CFR § 685.202. MOHELA updated its billing statement templates to disclose the change beginning March 1, 2024, but the regulatory effective date was July 1, 2023. For a Direct Loan borrower, accrued forbearance interest remains a separate balance at exit rather than being folded into the principal.

FFEL Program loans not held by the Department of Education are not covered by the 2023 rule and may still capitalize at forbearance exit, per the StudentAid.gov Mandatory Forbearance Request document. You can verify whether your loans are federally held by checking StudentAid.gov under “My Aid.”

Your Rights if MOHELA’s SAVE Interest Accrual Was Incorrect

California and Federal Servicing Requirements

California’s Student Borrower Bill of Rights, codified at California Civil Code § 1788.100 et seq., requires student loan servicers to provide accurate information, maintain accurate account records, and correct errors. A servicer that applied interest to a SAVE account during a period when the rate should have been 0%, or that failed to correct the account after a borrower identified the discrepancy, is operating outside the requirements of the Student Borrower Bill of Rights. The Rosenthal Fair Debt Collection Practices Act, California Civil Code § 1788 et seq., extends consumer protections to original creditors in California and covers servicer communications about amounts owed — a MOHELA statement overstating the balance because of incorrectly accrued interest is subject to the Act’s accuracy requirements.

Credit Reporting Requirements and the Dispute Process

MOHELA furnishes your student loan balance information to Equifax, Experian, and TransUnion. A balance inflated by incorrectly accrued SAVE interest appears on your credit reports and affects your debt-to-income ratio, which lenders use to evaluate mortgage and auto loan applications and which landlords review on rental applications.

California’s Consumer Credit Reporting Agencies Act, California Civil Code § 1785 et seq., and the federal Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., both require MOHELA to report accurately. A dispute filed directly with Equifax, Experian, or TransUnion triggers an investigation requirement under FCRA § 1681s-2: each bureau is required to contact MOHELA as the furnisher, and MOHELA is required to investigate and correct any inaccurate information. If MOHELA verifies an inaccurate balance rather than correcting it, California Civil Code § 1785.25 and FCRA § 1681s-2 both provide a basis for further action.

Documents to Preserve and Steps to Take

Records to Save if Your SAVE Account Showed Incorrect Interest

If your MOHELA balance increased in a way that does not match what your SAVE account was supposed to show, preserving these records establishes the factual basis for any dispute or escalation.

1. MOHELA billing statements from October 2023 through the present, showing your balance and interest line items for each billing cycle.
2. Screenshots of your MOHELA Account History showing balance changes, interest charges, and dates, including any periods displaying a 0% interest rate alongside a growing balance.
3. SAVE Plan enrollment records from StudentAid.gov confirming your enrollment dates and repayment or forbearance status for each month in question.
4. Forbearance notices from MOHELA confirming the SAVE forbearance status and its stated interest terms.
5. Any communications from MOHELA stating your account was in 0% interest status, would be corrected, or was under review.
6. Credit reports from Equifax, Experian, and TransUnion for each period in question, available free at annualcreditreport.com.
7. Records of any disputes you submitted to MOHELA, Equifax, Experian, TransUnion, the CFPB, Federal Student Aid, or the California DFPI, and every response you received.
8. Records of any downstream financial harm, including loan or rental application denials, higher interest rates offered on credit, or credit score changes that coincide with the inflated balance periods.

Escalation Paths if MOHELA Does Not Correct the Error

If a written dispute to MOHELA does not produce a correction, a borrower has several escalation paths. The Federal Student Aid Ombudsman handles disputes about federal loan accounts at studentaid.gov/feedback-ombudsman/disputes/prepare. The CFPB accepts complaints about student loan servicers at consumerfinance.gov/complaint. California borrowers can also contact the DFPI Student Loan Ombudsman at dfpi.ca.gov or 866-275-2677. Each channel creates a documented record of the dispute and the response received.

Conn Law, PC Is Investigating MOHELA SAVE Interest Errors for California Borrowers

The SAVE Plan is being phased out under the One Big Beautiful Bill Act and will no longer be available by July 2028. SAVE borrowers will be transitioned to other repayment plans, per the Department of Education. A balance that was inflated by incorrectly accrued interest during the SAVE period will carry into whatever plan a borrower is transitioned into, and if that inflated balance was reported to credit bureaus, the reporting error does not resolve on its own when the plan ends.

Conn Law, PC is currently investigating MOHELA interest errors for California borrowers whose accounts showed interest accruing during the SAVE Plan payment period or the SAVE litigation forbearance, and for borrowers whose credit reports reflected a balance inflated by interest from either period. California borrowers can contact Conn Law, PC for a free case evaluation, and cases are taken on a contingency basis.

Frequently Asked Questions

Is Interest Accruing on the SAVE Plan Forbearance?

Interest should not have accrued on SAVE forbearance loans between August 2024 and July 2025, when the Department of Education confirmed a 0% interest rate for borrowers in the SAVE administrative forbearance. A court ruling caused interest to resume accruing prospectively on August 1, 2025. Interest accruing from that date forward is expected; interest that accrued before August 1, 2025 during the confirmed 0% period was not supposed to.

Should My SAVE Plan Balance Have Increased From Interest During Active Repayment?

34 CFR § 685.209(h)(1) provides that during all periods of repayment under the SAVE plan, the Secretary does not charge the borrower’s account for any accrued interest the monthly payment does not cover, meaning a borrower’s balance should not have grown from interest accumulation during the active SAVE repayment period. A MOHELA account showing interest accruing beyond the required payment amount during months when payments were current may not have had the SAVE interest subsidy applied correctly.

Does Interest Accrued During SAVE Forbearance Get Added to My Principal When Forbearance Ends?

A federal rule change effective July 1, 2023 eliminated capitalization upon forbearance exit for Direct Loans and federally held FFEL Program loans, meaning accrued interest remains a separate balance and does not get folded into the principal. FFEL Program loans not held by the Department of Education are not covered by the 2023 rule and may still capitalize at forbearance exit.

Can Incorrect SAVE Interest Accrual Affect My Credit Report?

MOHELA furnishes student loan balance information to Equifax, Experian, and TransUnion, and a balance inflated by incorrectly accrued SAVE interest appears on those credit reports. A higher reported balance affects your debt-to-income ratio, which lenders use to evaluate mortgage and auto loan applications. Both the federal Fair Credit Reporting Act and California’s Consumer Credit Reporting Agencies Act require MOHELA to report accurately and investigate disputes.

References and Additional Reading

https://www.ecfr.gov/current/title-34/subtitle-B/chapter-VI/part-685/subpart-B/section-685.209 https://www.law.cornell.edu/cfr/text/34/685.202 https://www.law.cornell.edu/uscode/text/15/1681 https://www.law.cornell.edu/uscode/text/15/1681s-2 https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1788.100. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1788. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1785. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1785.25. https://mohela.studentaid.gov/DL/resourceCenter/StudentLoanInterest.aspx https://mohela.studentaid.gov/DL/resourceCenter/RepaymentOptions.aspx https://studentaid.gov/announcements-events/save-plan https://studentaid.gov/aid-summary/ https://studentaid.gov/feedback-ombudsman/disputes/prepare https://www.annualcreditreport.com https://www.consumerfinance.gov/complaint/ https://dfpi.ca.gov/consumers/student-loans/ https://www.studentloanborrowerassistance.org/ https://www.cnbc.com/2025/06/09/student-loan-borrower-in-save-forbearance-says-interest-growing.html https://www.newsweek.com/student-loan-borrowers-see-balances-surge-despite-forbearance-promise-2082961 https://www.forbes.com/sites/adamminsky/2025/06/06/borrowers-receive-misleading-student-loan-interest-notices—heres-what-to-know/ https://www.forbes.com/sites/adamminsky/2026/02/22/servicers-are-reducing-student-loan-balances-for-some-borrowers–heres-why/ https://connlawpc.com/contact/