The Biden administration hasn’t been shy about spending money, and spending on higher education policy has been no exception. The most obvious channel for (attempted) spending was the illegal plan to cancel $10,000 to $20,000 in student debt for most borrowers that was halted by the Supreme Court. But there’s another plan in the works that’s slated to cost even more and yet it has gone largely under the radar due to its impacts being less immediately apparent. That is, a revision to the student loan repayment system that would allow borrowers to pay back, in many cases, far less than what they’ve borrowed. The president is calling this the “SAVE” plan, which is an unusual name for a plan that is slated to cost taxpayers so dearly.

At the outset, Biden’s plan to cancel student debt was estimated, by the Congressional Budget Office, to cost Americans $400 billion. That’s an enormous sum. But it’s less than the newly estimated cost of the plan that Biden has to change how students’ borrowers repay their loans. Estimates published by the Penn Wharton Budget Model at the University of Pennsylvania indicate that the “SAVE” plan could actually cost taxpayers up to $550 billion over a ten-year budget window. 

How on earth is Biden making this happen? Well, mostly by telling borrowers they needn’t pay back so much of their debt. And does he even have the authority to make this change without legislation? That’s questionable.

We’ve long had in place programs that protect borrowers from facing unaffordable student loan payments in times of depressed earnings (even granting forgiveness for longstanding unaffordable debts.) These programs are collectively referred to as Income Driven Repayment Programs. These programs should exist; we don’t want people spending their lifetimes under the weight of unaffordable student debt. But what Biden is doing would undermine the purpose of these programs as a safety net for borrowers truly in need and turn the system into a de-facto grant program that disproportionately benefits a set of already-privileged Americans.

Borrowers who are truly struggling with student loans were already eligible for relief. So those who are made newly eligible for relief by the President’s SAVE plan are, by construction, not among the neediest borrowers, and, by virtue of having the privilege of education after high school, far from the neediest Americans.

As the White House and the Department of Education get closer to implementing this new program, we’re likely to see legal challenges to the effort. Perhaps these will enable the courts to once again stand in the way of an ill-conceived effort to undermine our system of student lending. But if they don’t, this move will prove to be tremendously costly to Americans, both in dollars and in the sense that it will upend our current system of higher education finance; and not for the better. 

It’s time for the White House to stop it with these ill-conceived, overreaching efforts and work with Congress to pass some sensible and overdue reforms.