White House unveils new student loan initiatives while justifying costs to taxpayers

The White House and Department of Education announced that another $7.4 billion in federal student loans owed by 277,000 borrowers will not have to be repaid, bringing the total to $153 billion in forgiven student loans announced since last summer.

“Thanks to all the actions taken by the Biden administration, nearly 4.3 million borrowers have been approved for debt cancellation,” press secretary Karine Jean-Pierre said on a call with reporters.

While the White House wants to see that number continue to rise, any debts that loanees do not repay fall on taxpayers. In addition to the $153 billion in loan write-offs, the Department of Education has announced the Saving on a Valuable Education, or SAVE, plan to drastically reduce the amount that future borrowers will have to repay.

The Washington Examiner asked about the cost of that program, which the Penn Wharton Budget Model estimates will cost taxpayers $475 billion over 10 years, and whether it’s an effective use of public money.

“We believe that this is providing critical breathing room for borrowers,” an administration official responded. “The SAVE borrowers here in particular have low balances for college, which we know is generally very strongly associated with people who are the first in their families go to college, people with Pell Grants, a lot of people who tried college and maybe didn’t finish or went to a community college.”

SAVE will allow them to avoid being “weighed down by their debt,” the official added, which will help them rise into the middle class.

But Republicans argue the concept is unfair to those who never went to college, never took out loans, or paid them off and further hold that the president has no authority to spend money without approval from Congress.

A pair of lawsuits from GOP-led states are trying to strike down President Joe Biden’s student loans plans, which Jean-Pierre denounced.

“Republican elected officials across 18 states want to prevent their own constituents from benefiting from the SAVE plan,” she said. “They want to end SAVE, make their constituents’ monthly payments go up, and keep them under mountains of loan debt with no end in sight.”

Education Secretary Miguel Cardona spoke on the call as well, calling SAVE “the first real student loan safety net in the country.”

“Not only are we providing relief to borrowers, we’re preventing defaults,” Cardona added.

Biden has been aggressive in the student loans space, announcing $430 billion in write-offs in August 2022 only to see the move overturned by the Supreme Court in June 2023. Since then, he has announced a steady drip of new, relatively small rounds of forgiveness and promised to try to do more.

The situation has major spending and election implications, as Biden is looking to win over younger voters and fulfill a 2020 campaign pledge.

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Missouri Attorney General Andrew Bailey is one of the Republicans who pledges to stop him.

“The president does not get to thwart the Constitution when it suits his political agenda,” he said last week. “I’m filing suit to halt his brazen attempt to curry favor with some citizens by forcing others to shoulder their debts.”