The SAVE Plan Cost Three Times What the Biden Administration Told the Public. Then Two Federal Courts Said It Was Illegal Anyway.
When the Biden Education Department rolled out its SAVE income-driven student loan repayment plan in 2023, it told the public the plan would cost $156 billion over ten years. The Congressional Budget Office scored it at $276 billion. The Penn Wharton Budget Model, running its own independent long-run analysis, put the number at $475 billion — roughly three times what the administration’s own estimate told Americans to expect.
The gap wasn’t an isolated accounting quirk. The Government Accountability Office has separately tracked the entire Direct Loan program’s own lifetime cost projection swing by $311 billion over roughly 25 years of re-estimates — most of it because income-driven repayment plans like SAVE cost far more once real borrower behavior replaced the original models.
None of that cost overrun ended up mattering the way the administration hoped. Two federal courts — the Supreme Court in 2023 and the Eighth Circuit Court of Appeals in 2024, affirmed in February 2025 — found that the executive branch didn’t have the legal authority to do what it was doing, first with mass forgiveness and then with SAVE itself. This is the record of what the plan cost, what got forgiven anyway, and why the courts shut it down.
- $156B / $276B / $475B — the Education Department's own SAVE plan estimate, versus CBO's official score, versus the Penn Wharton Budget Model's independent projection — GAO, CBO-58983, Penn Wharton
- $311 billion — swing in the Direct Loan program's own lifetime cost re-estimate, from a projected $114 billion gain to a $197 billion cost — GAO-22-105365
- 8 million — borrowers shunted into interest-free forbearance while SAVE was tied up in litigation
- $188.8 billion — forgiven for 5.3 million borrowers under Biden, mostly through existing programs like Public Service Loan Forgiveness — CNBC, Jan. 13, 2025
- $271 billion — CBO-scored federal savings from ending SAVE, PAYE, ICR, and old IBR under the One Big Beautiful Bill Act — CRS R48727
“Saving on a Valuable Education,” or SAVE, was the Education Department’s marquee income-driven repayment plan, unveiled in 2023 with a published 10-year cost of $156 billion. That was the number the administration put in front of Congress and the public as it built support for the plan. It was not the number that held up.
The Congressional Budget Office, Congress’s own nonpartisan scorekeeper, put the plan’s cost at $276 billion — nearly double the Department’s figure. The Penn Wharton Budget Model, an independent academic model out of the University of Pennsylvania with no stake in the political outcome, estimated $475 billion. Three credible estimators, looking at the same program with the same basic enrollment assumptions, landed on numbers that differed by more than $300 billion.
The pattern isn’t unique to SAVE. GAO’s recurring audits of the entire federal Direct Loan program show its own lifetime cost estimate has swung by $311 billion across roughly 25 years of re-estimates — from an original projection that the program would net the government $114 billion to a current estimate that it will cost taxpayers $197 billion. GAO attributes roughly $102 billion of that swing to pandemic-era CARES Act relief, with most of the remainder tied to re-estimates based on how borrowers actually behaved under income-driven repayment plans once enrolled plus harder-to-predict economic factors like income growth and inflation — meaning IDR plans, as a category, have consistently cost far more in practice than the government modeled on paper.
SAVE didn’t start as the administration’s first plan — it was the second. In June 2023, the Supreme Court decided Biden v. Nebraska 6-3, with Chief Justice John Roberts writing the majority opinion striking down the Education Department’s original mass-forgiveness program: a roughly $430 billion plan invoked under the HEROES Act that would have canceled debt for up to 43 million borrowers. The Court held the Department had exceeded the authority Congress actually gave it.
The administration, then led by Secretary of Education Miguel Cardona (D), didn’t abandon debt relief after that loss — it rebuilt the effort through a different legal channel. Rather than invoking emergency authority for mass cancellation, the Department created SAVE by regulation, structured as an income-driven repayment plan rather than a forgiveness program, betting that the rulemaking process would hold up where the HEROES Act theory hadn’t.
It didn’t work. The core legal problem — whether the Higher Education Act actually gives the Department authority to restructure repayment on this scale — followed SAVE into court, and this time the challengers didn’t need the Supreme Court to win.
The Eighth Circuit Court of Appeals blocked SAVE in its entirety in 2024, and affirmed that ruling in February 2025, on the same core theory that sank the HEROES Act plan: the Education Department exceeded its statutory authority under the Higher Education Act. The Eighth Circuit’s reasoning went further than SAVE alone — it called into question the legality of two older income-driven repayment plans as well, PAYE and ICR, both of which predate the Biden administration.
Missouri Attorney General Andrew Bailey (R) led the state coalition that brought the winning case. The practical effect of the ruling, while it worked through the courts, was that roughly 8 million enrolled borrowers were shunted into interest-free forbearance — not making payments, not accruing interest, but also not moving toward forgiveness under any plan, income-driven or otherwise, while the litigation was pending.
June 2023 — Supreme Court strikes down the ~$430 billion HEROES Act mass-forgiveness plan, 6-3, in Biden v. Nebraska.
2023 — Education Department creates the SAVE plan by regulation as a replacement approach.
2024 — Eighth Circuit Court of Appeals blocks SAVE in its entirety; ~8 million borrowers moved into interest-free forbearance.
February 2025 — Eighth Circuit affirms the block, and questions the legality of the older PAYE and ICR repayment plans too.
July 4, 2025 — One Big Beautiful Bill Act signed into law, formally ending SAVE, PAYE, ICR, and old IBR.
The litigation didn’t stop debt relief from happening — it just happened somewhere else. Education Department data reported by CNBC on January 13, 2025 showed $188.8 billion forgiven for 5.3 million borrowers under Biden, achieved mostly through administrative fixes to existing programs rather than through the blocked mass-cancellation plan or SAVE itself. Public Service Loan Forgiveness accounted for more than 40% of that total.
While the forgiveness numbers were climbing, the Department’s own Inspector General was finding the program’s books didn’t add up. ED’s OIG found the Department was not compliant with Payment Integrity Information Act reporting requirements for the Direct Loan program in fiscal year 2021, and separately found that the Department’s own published improper-payment rate of 1.5% undercounted a recalculated rate of 2.64% — a gap OIG valued at $1.16 billion. Separate OIG work identified roughly $90 million in improper disbursements, including more than $30 million sent to deceased individuals.
A fresh 2026 data release adds another layer. Federal Student Aid’s Electronic Announcement GEN-26-12, published February 18, 2026, reported updated nonpayment-rate data for Direct Loan borrowers entering repayment between January 2020 and May 2025: more than 1,800 institutions now carry nonpayment rates of 25% or higher — roughly two-thirds of them for-profit schools, about a quarter public institutions. University of Phoenix sits at exactly 25%, per that same release.
President Trump signed the One Big Beautiful Bill Act on July 4, 2025, formally ending SAVE, PAYE, ICR, and old IBR and replacing them with a new Repayment Assistance Plan and a Tiered Standard Plan. CBO scored the reversal at roughly $284 billion in net mandatory savings for fiscal years 2025-2034, with about $271 billion of that specifically attributable to ending SAVE, PAYE, ICR, and old IBR, according to the Congressional Research Service.
Secretary of Education Linda McMahon (R) has argued, in a March 2026 Washington Post op-ed and in House budget testimony, that colleges have no incentive to control costs when the federal government backstops uncapped borrowing — and has pushed ROI transparency and loan caps as the fix. House Education and Workforce Committee Chairman Tim Walberg (R-MI) has pushed similar affordability and accountability reforms. Ranking Member Bobby Scott (D-VA) has been the loudest voice on the other side, arguing the rule changes harm low- and middle-income borrowers and introducing the LOAN Act as a counter-proposal — the debate over how to fix what SAVE left behind is not one-sided.
The scale underneath all of this remains enormous regardless of which repayment plan is in effect: total outstanding federal student debt stood at $1.7 trillion across 42.6-42.8 million borrowers as of February/March 2026 — $1.87 trillion combined with private loans, per the Federal Reserve. SAVE is gone, but the debt it was designed to manage is not.
Miguel Cardona (D) — Secretary of Education under Biden; built and ran the SAVE plan and the broader forgiveness effort that GAO, CBO, and the courts later found this costly and, in SAVE’s case, unlawful.
Andrew Bailey (R) — Missouri Attorney General; led the winning state coalition in the Eighth Circuit litigation that blocked SAVE.
Linda McMahon (R) — current Secretary of Education; argues uncapped federal borrowing removes colleges’ incentive to control costs, pushes ROI transparency and loan caps.
Tim Walberg (R-MI) — Chair, House Education and Workforce Committee; pushed affordability and accountability reform.
Bobby Scott (D-VA) — Ranking Member, House Education and Workforce Committee; opposes the Department’s rule changes as harmful to low- and middle-income borrowers, introduced the LOAN Act as a counter-proposal.
The administration told the public SAVE would cost $156 billion. CBO said $276 billion. An independent model said $475 billion. The Direct Loan program’s own lifetime cost estimate has swung $311 billion on paper, largely because income-driven repayment plans cost more in practice than modeled. None of that stopped two federal courts from finding the underlying legal theory didn’t hold up — first at the Supreme Court in 2023, then at the Eighth Circuit in 2024 and 2025. Congress has since repealed the plan and CBO expects it to save roughly $271 billion by doing so. The debt itself — $1.7 trillion, held by 42.6 million-plus borrowers — is still there, still growing, and still the thing every successor plan has to answer for.
