(NewsNation) — If the Supreme Court allows President Joe Biden’s student loan relief plan to move forward, experts say the entire proposal could rank among the largest transfer programs in American history.
Together, Biden’s one-time direct loan forgiveness plan and the recently unveiled Income-Driven Repayment (IDR) plan may cost upward of $830 billion over 10 years, according to a recent analysis by researchers at the Penn Wharton Budget Model.
That level of spending would put Biden’s student loan relief package among the most expensive transfer programs in the country, according to an analysis for the Brookings Institution by Senior Fellow Adam Looney.
“That’s about the same amount that we have spent over the last 20 years for Supplemental Security Income,” said Looney, who is also a finance professor at the University of Utah.
The Supplemental Security Income (SSI) program provides monthly cash assistance to about 8 million people who are disabled or elderly and have little income and few assets.
Other major federal transfer programs are in the same ballpark.
At $830 billion, the cost of student loan relief over 10 years would nearly match the last 20 years of federal spending on housing assistance, and cost slightly less than 20 years of food stamps, Looney found.
Unlike those transfer programs, which specifically benefit low-income households, Looney is concerned Biden’s proposal is relatively untargeted.
“A lot of the dollars are going to groups that are not particularly disadvantaged, either based on the circumstances in which they grew up or their post-college or post-graduate school earnings,” he said.
This week, the Supreme Court will hear oral arguments on two cases challenging the president’s one-time student loan forgiveness program. The rollout has been on hold since a federal judge struck it down in November.
The plan offered up to $10,000 in the form of a one-time federal student loan cancellation for those making less than $125,000 per year or households under $250,000 per year. Pell Grant recipients were eligible for an additional $10,000 of relief.
If the Supreme Court rejects the one-time cancellation program, student loan relief could still come in the form of the Income-Driven Repayment plan, which is not currently facing legal challenges.
In January, the Department of Education unveiled the IDR, which would overhaul one of several payment options offered by the federal government and lower monthly student debt payments for millions of Americans now and in the future.
“We cannot return to the same broken system we had before the pandemic,” U.S. Secretary of Education Miguel Cardona said in a statement. “These proposed regulations will cut monthly payments for undergraduate borrowers in half and create faster pathways to forgiveness.”
But the total cost of both aspects of the plan remains an open question and will depend on how many people take up the offers.
In September, the Congressional Budget Office estimated that the one-time debt cancellation would cost about $400 billion over 30 years. The Biden administration had initially put the price tag at $240 billion over 10 years. Penn Wharton put the cost closer to $500 billion over a decade.
The second part of Biden’s proposal, the income-driven repayment plan, also comes at a high price. Independent Researchers at the Penn Wharton Budget Model estimate the IDR plan will cost between $333 to $361 billion over a decade — more than twice the cost estimate released by the Biden Administration.
Penn Wharton researchers noted that their estimates do not include the effects of students increasing their borrowing, which could happen if federal loan terms become more favorable in perpetuity.
Looney believes the president’s plan will end up prolonging Americans’ reliance on federal student loans.
“Both the forgiveness and the income-driven repayment don’t do anything to solve the problem that we’re making loans that we know are not going to be repaid,” said Looney. “In fact, it makes that problem much worse.”
There are more than 40 million borrowers today with federal student loans. About 26 million people had applied for debt relief before the program was shut down by the courts. The Supreme Court’s ruling will likely come at the end of the current term, around late June or early July.
The proposed Income-Driven Repayment Plan is currently in the middle of a public comment period that is expected to take months.