On Wednesday, the Supreme Court rejected the Biden-Harris administration’s request to get rid of an injunction from an appeals court that put a hold on the administration’s SAVE plan, which would exempt student loan borrowers’ income from their repayment obligation.
In mid-July, the 8th Circuit Court of Appeals put a hold on the Biden-Harris administration’s entire student loan forgiveness program after seven Republican-led states requested that parts of the plan not already on hold be stayed. The SAVE program is estimated to cost $475 billion over a ten-year period.
Sen. Bill Cassidy (R-LA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, said in response to the appeals court decision, “Just like Biden’s other student loan schemes, this IDR policy does not ‘forgive’ debt. It transfers the burden of $559 billion in debt from those who willingly took it on to Americans who chose to not go to college or already sacrificed to pay off their loans.”
In May, President Biden transferred $7.7 billion more in student debt to taxpayers. “The Supreme Court last year struck down Biden’s $400 billion student-debt forgiveness plan under the HEROES Act. The president immediately announced his plan to defy the highest court’s ruling by using the Higher Education Act to wipe out student loan debt,” National Review noted in May.
The University of Pennsylvania’s Wharton School wrote in July 2023:
About $200 billion of that cost will come from payment reduction for the $1.64 trillion in loans already outstanding in 2023. We estimate that about 53 percent of the current loan volume will move to SAVE after it goes active in July 2024, implying that about $869 billion will be subject to enhanced subsidies under SAVE. The remainder of the budget cost, or about $275 billion, comes from reduced payments for about $1.03 trillion in new loans that we estimate will be extended over the next 10 years. We estimate a take-up rate for future loans of 70 percent, implying that about $645 billion in future loans will be subsidized. About 6.57 percent of future borrowers (or 4.98 percent of total predicted loan volume) will never have to make any payments under SAVE.
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