The Biden administration on Friday announced yet another student-loan debt giveaway, this time passing $7.4 billion in debt accumulated by an estimated 277,000 Americans to taxpayers through the Saving on a Valuable Education (SAVE) income-repayment plan and other similar repayment options.
To date, the Biden administration has canceled $153 billion of student debt for 4.3 million Americans through executive action.
The latest student-debt forgiveness policy comes after the Biden administration announced a plan to transfer $20,000 in accrued interest per borrower for 23 million Americans onto taxpayers, and forgive all student debt for roughly 2 million borrowers eligible for SAVE, Public Service Loan Forgiveness (PSLF), and other repayment plans.
Under the Biden administration’s new policy, borrowers eligible for the various repayment plans will have their debt wiped out even if they did not submit an application for the plans. Those who have been paying back student loans for 20 years and individuals that borrowed money to enroll in low-value education programs will also benefit from the Biden administration’s student-debt forgiveness plan. Furthermore, people experiencing “hardship” will also be eligible.
A cost figure was not included for each section of the Biden administration’s massive student-debt forgiveness scheme. An estimated 30 million Americans will financially benefit from the Biden administration’s various student-loan forgiveness schemes if the plan survives legal scrutiny.
PSLF was used by the Biden administration last month to wipe out almost $6 billion of debt for 78,000 employees concentrated in the government and non-profit sectors. The Department of Education has greatly expanded PSLF eligibility to forgive over $60 billion of student debt since October 2021.
SAVE is an income-based repayment plan enacted by the Biden administration last year estimated to cost $475 billion over a ten-year period. The White House announcement touts 8 million SAVE enrollees and 4.5 million of them with zero interest payments due to the SAVE plan. The SAVE formula allows borrowers to waive unpaid interest payments and reduces student-loan payments by changing how income is calculated.
Republican attorneys general have launched legal challenges to the SAVE plan after the Supreme Court last year struck down a similar plan by the Biden administration to forgive over $400 billion of student debt under the HEROES Act. President Biden openly bragged last year about his plan to defy the Supreme Court by equipping the Higher Education Act this time around to create the SAVE plan.
Student-debt forgiveness will likely play well with progressive young voters, a key portion of Biden’s coalition dissatisfied with the administration over its support for Israel.