Biden administration launches "SAVE plan": new student loan repayment policy sparks controversy

The Biden administration today (July 23, 2025) officially opened applications for the "SAVE" program (Saving on a Valuable Education), which aims to reduce the student loan burden of low-income borrowers. The program allows borrowers to repay loans based on their income proportion, and some loans can be forgiven after 10 years. The Department of Education expects that about 2 million borrowers will benefit, but the policy has also been strongly criticized by Republican lawmakers, who believe that it "increases the burden on taxpayers" and "oversteps administrative authority" 17.

1. The core content of the SAVE program

Repayment based on income proportion: The borrower's monthly repayment amount is reduced to 5% (undergraduate loans) or 10% (graduate loans) of disposable income, which is lower than the 10%-20% of previous similar plans 17.

10-year waiver clause: If the borrower's original loan amount is ≤ US$12,000 and repays on time within 10 years, the remaining debt can be forgiven (for every additional US$1,000 borrowed, the repayment period is extended by 1 year) 17.

20/25 years of full forgiveness: After all borrowers have paid for 20 years (undergraduate) or 25 years (graduate), the remaining debt will be automatically cleared 17.

Interest-free growth: If the monthly payment does not cover the accrued interest, the government will forgive the difference to prevent the debt from "snowballing" 17.

2. Expected beneficiaries

7.5 million borrowers have joined the SAVE plan, of which 4.3 million have reduced their monthly payments to $0 (income below 225% of the federal poverty line)17.

The first 150,000 borrowers received $1.2 billion in debt relief today, and the Biden administration has so far forgiven $138 billion in loans for 3.9 million people17.

The main beneficiaries include low- and middle-income families, public service practitioners (teachers, nurses, etc.) and disabled borrowers17.

3. Criticism from Republicans and conservatives

"Fiscally irresponsible": Republican lawmakers accused the plan of "letting taxpayers pay the bill", arguing that people who have not attended college or have paid off their loans are forced to subsidize others 17.

"Executive overreach": The Supreme Court rejected Biden's $400 billion loan forgiveness plan in 2023, but the government is still pushing for relief through workarounds such as SAVE 17.

"Distorting the higher education market": Critics say that loose repayment policies may encourage universities to continue to raise tuition, exacerbating debt problems 17.

4. Political impact and future trends

2024 election issues: Biden regards the SAVE plan as a core policy for "middle-class family relief", in contrast to Trump's "cutting education subsidies" (such as the Big and Beautiful Act to cancel some student loan assistance) 1417.

Legal challenge risk: Conservative groups may file a lawsuit to question the legality of SAVE, similar to the Supreme Court's ruling in 2023 17.

Long-term fiscal impact: The Congressional Budget Office (CBO) estimates that the SAVE plan may increase the deficit by tens of billions of dollars over the next 10 years 17.