Taxpayers scored a major victory when a federal appeals court struck down the Saving on a Valuable Education (SAVE) Plan.  Citizens Against Government Waste (CAGW) consistently called President Biden’s student loan forgiveness proposals costly, unfair, and unconstitutional..

The U.S. Court of Appeals for the 8th Circuit (8th Circuit) ruled on February 18, 2025, that the SAVE Plan was illegal and exceeded the Department of Education’s legal authority.  The decision said, “The Secretary has gone well beyond this authority by designing a plan where loans are largely forgiven rather than repaid.” 

The SAVE Plan was unveiled in an effort to circumvent the Supreme Court’s June 30, 2023, 6-3 decision in Biden v. Nebraska that there is no authority under the Higher Education Relief Opportunities for Students Act of 2003 for the U.S. Secretary of Education to create a student loan forgiveness program for most borrowers and cancel $430 billion in debt.  President Biden made it clear that he was going to find a way around the decision, and one result was the SAVE Plan.  It cut monthly payments for most students, some of whom would not have to pay anything, and made it easier for some borrowers to have all their debt forgiven after 10 years.  According to an analysis by the Penn Wharton Budget Model, the SAVE Plan would have cost taxpayers $475 billion.

Student loan forgiveness disproportionately benefits higher-income Americans to the detriment of lower-income and working-class taxpayers.  According to the House Budget Committee, more than 60 percent of Americans do not have a college degree and 87 percent of adults do not have student loans.  Further, the committee found that 56 percent of all student loan debt is owed by Americans with graduate degrees, who make up only 14.3 percent of the population.

Widespread student loan forgiveness is not only costly to taxpayers but also fails to drive down the increasing cost of higher education.  From school years 2012-13 to 2022-23, the average tuition increased by 25.6 percent at all four-year colleges and 16.9 percent at two-year colleges, before adjusting for inflation.  The government forgiving student loans does nothing to lower the cost of education, and may in fact lead to even higher tuition because schools know that they can charge more and have the government pick up the tab.

Any plan that forgives student loans in any form or manner is deeply unfair and unconstitutional.  Widespread student loan forgiveness forces all taxpayers, including those who either do not carry any student loan debt or have already paid their debt off, to pay off someone else’s loans.  Student loan forgiveness is a clear example of the executive branch exceeding its authority and the 8th Circuit decision was a major victory for taxpayers.