Supreme Court reviews student loan debt handout plan: How it may impact you

The Supreme Court is set to hear arguments Tuesday in a pair of cases that may determine the fate of President Joe Biden’s student loan debt handout plan and have financial implications for millions of people with student loan debt and American taxpayers.

Justices will hear a pair of challenges to the student loan debt handout, both of which involve questions about whether the Department of Education was authorized by Congress to advance the rule implementing Biden’s plan and followed the proper regulatory procedures. Aside from the statutory and regulatory aspects of the cases, Biden v. Nebraska considers whether six states have the constitutional standing to challenge the rule; Department of Education v. Brown looks at whether two student loan borrowers have standing to bring the challenge.

Biden’s student loan handout plan would cancel $10,000 in federal student loans for individuals making less than $125,000 per year or households earning less than $250,000 annually as of 2020 or 2021. Recipients of Pell Grants – who typically demonstrate greater financial need – would receive an additional $10,000 in debt cancellation. Loans would have to have been disbursed prior to July 1, 2022, to be eligible for the plan.

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About 43 million student loan borrowers are eligible under the plan, nearly half of whom would have the entirety of their debt canceled. The Biden administration has said that 26 million have applied for relief to date and 16 million applicants have been approved pending the resolution of the court cases. The nonpartisan Congressional Budget Office has said it would cost taxpayers about $400 billion over the next three years if fully implemented.

Elaine Parker, president of the Job Creators Network, which filed suit on behalf of the two borrowers in Department of Education v. Brown, told FOX Business’ Neil Cavuto that if the Supreme Court sides with Biden, it will give "not only this president but every future president a blank check to create programs this size without any input from Congress or the American people." She added that it will "signal to colleges that they can continue increasing tuition on these students higher than the rate of inflation."

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Biden has said he has the authority to wipe away student loan debt under a law that was initially enacted after the Sept. 11, 2001, terror attacks. Known as the Higher Education Relief Opportunities for Students (HEROES) Act, the law was initially intended to benefit service members deployed to Afghanistan and Iraq by waiving their student loan debt or providing other relief. The HEROES Act was enacted in January 2002, was extended and revised in 2003 and 2005, then was made permanent in 2007.

Both the Trump and Biden administrations cited the legal authorities granted by the HEROES Act in pausing student loan repayments due to the impact of the COVID-19 pandemic, although the Trump administration didn’t pursue a debt cancellation plan under its authority like the Biden administration has.

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Student loan repayments remain paused until either 60 days after the Supreme Court ruling is released or 60 days after June 30 – whichever occurs first. It’s possible that Biden could issue a further extension of the repayment pause depending on the outcome of the case.

The nonpartisan Committee for a Responsible Federal Budget has estimated that each month the repayment pause remains in effect costs the federal government $5 billion in lost revenue.

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Supreme Court justices are expected to issue rulings in the student loan debt handout cases later this year, with decisions expected before the current term ends in late June or early July.

Fox News’ Shannon Bream and Bill Mears contributed to this article.