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Blog Post

Biden Irresponsibly Encourages Borrowers to Enroll in SAVE Plan


April 10, 2024

President Biden is hard at work encouraging student borrowers to enroll in his new SAVE Plan, a de facto loan forgiveness program that faces increasing legal scrutiny. 11 states, led by Kansas, filed a lawsuit. Just recently, Missouri and six other states announced that they would also sue the Biden Administration, bringing the total to 18 states. He and Vice President Harris recently launched “SAVE Day of Action,” hosting a kick-off event, posting promotional videos, and mobilizing their social media followers in an effort to maximize enrollment in the program. You’d think they’re celebrating a new federal holiday.

Their stated goal is to “ensure that those carrying student loan debt can find affordable repayment options and a pathway towards forgiveness.” Brushing aside the airy vision—as well as the pomp and circumstance—this whole effort is a naked attempt to forgive as much debt as possible before the courts have a chance to strike down the program as unconstitutional.

The states challenging Biden’s SAVE plan accuse him of transforming the federal student loan program from a repayment program into a forgiveness program, costing taxpayers hundreds of billions of dollars (at least) without explicit Congressional authorization. While establishing standing will be critical to the success of this suit, their argument is compelling: Forgiveness will negatively affect their tax revenues (because it constitutes forgone taxable income), and it will reduce usage of Public Service Loan Forgiveness (PSLF), a program that attracted legal talent and teachers to states.

This strategy is par for course for this administration. In the fall of 2022, Biden promised up to $20,000 in forgiveness for Pell Grant recipients, and $10,000 for others, encouraging borrowers to sign up for the program. This is despite the fact that it stood on legally dubious grounds (to say the least): The Supreme Court struck down the proposal in June of 2023, leaving the millions of students expecting loan forgiveness high and dry. As Beth wrote last year, “Biden and his progressive allies promised loan forgiveness that almost every legal expert knew would be stopped cold by the courts.”

What’s surprising about the SAVE “Day of Action” is not that the Biden Administration is trying to rush this through before the courts can stop him. Biden was clear the day the Supreme Court struck down his initial plan that he was going to ignore the ruling (don’t forget to buy your Biden-Harris “Save Democracy” yard signs). It’s also not surprising that reliable political allies like teachers’ unions are going along with this radical and probably illegal plan.

It’s more surprising, however, to see middle-of-the-road companies like Pearson and Credit Karma along with business groups like the US Chamber of Commerce participate. One wonders if these companies properly vetted their participation in this effort. Do they realize that they are encouraging their customers and other partners to participate in a loan program that the courts very likely may strike down? They may be participating in a blatantly political bait and switch without realizing it.