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The Biden administration’s new income-driven repayment (IDR) plan known as Saving on a Valuable Education (SAVE) is “far more generous and costly” than what Congress intended when it passed the law authorizing IDR, argues a new report from the Defense of Freedom Institute, a conservative think tank.

Eleven states are currently suing to block SAVE, which offers borrowers generous repayment terms, a quicker pathway to loan forgiveness and other benefits. Parts of SAVE took effect last fall while the rest are set to kick in next month. A hearing in one lawsuit was held this week, with a ruling expected in two weeks.

More than 8 million borrowers have signed up for SAVE, and the Biden administration has forgiven $5.5 billion for 414,000 borrowers thanks to a new provision that offers those who took out less than $12,000 to forgiveness after 10 years of making payments. Other income-driven repayment plans offer forgiveness after 20 or 25 years.

Jason Delisle, the report’s author and a nonresident senior fellow at the Center on Education Data and Policy at the Urban Institute, a nonprofit research organization, wrote that SAVE might not survive the pending legal challenges. 

“Congress intended income-driven repayment to be a flexible repayment option with a last-resort loan forgiveness benefit that imposed negligible costs on taxpayers,” Delisle wrote. “The Biden administration’s SAVE plan runs roughshod over those intentions.”

Delisle looked into the legislative history of income-driven repayment plans, which Congress first created in 1993, leaving the specifics of its implementation up to the Education Secretary. His review included public statements and news releases, legislative proposals and hearing transcripts.

Delisle concluded in part that lawmakers assumed that any IDR plan would have minimal to no budget costs, that loan forgiveness was an afterthought in Congressional debates, and that monthly payments under IDR would be higher than those in the SAVE plan.

“The Biden administration’s SAVE plan is clearly a violation of the spirit of the law Congress passed,” Delisle said in a news release. “At the time, lawmakers thought that IDR should be designed to have virtually no budget cost. Fast forward 30 years and the Biden administration’s IDR plan has brought the annual cost of the federal student loan program to nearly $42 billion. Congress never would have agreed to that.”