The federal student loan payment pause that went into effect during the COVID-19 pandemic three years ago was never intended to be permanent, or even last as long as it has. At some point, borrowers were going to have to resume payments — in some cases, with or without a Biden administration loan forgiveness plan that aimed to cancel up to $20,000 per borrower.
With that plan under threat of being struck down by the U.S. Supreme Court, borrowers might have to resume payments on their full balances as early as this summer.
Following Tuesday’s oral arguments before the Supreme Court, legal experts told Time that it’s “increasingly likely” loan forgiveness will get thrown out by the court. No matter what the court decides, the current payment pause is set to expire 60 days after either June 30 or whenever the Supreme Court decides on the loan forgiveness plan.
If the court rules against the forgiveness plan, there’s a chance President Joe Biden will extend the pause yet again. But even with that possibility, it’s still a good idea to prepare both mentally and financially to resume loan payments — especially during a period of economic stress due to high inflation and rising interest rates.
More than 26 million Americans applied for student loan relief after applications opened in October 2022, Time reported. About 16 million were approved for forgiveness, though no debt has actually been canceled because legal challenges have put the program in a state of flux.
The Biden administration has spent months warning of dire consequences should those legal challenges end up killing the forgiveness plan. In a November 2022 court filing, U.S. Department of Education Undersecretary James Kvaal wrote that unless the department can provide debt relief, “we anticipate there could be an historically large increase in the amount of federal student loan delinquency and defaults as a result of the COVID-19 pandemic.”
At the very least, many borrowers will have to adjust their finances to resume payments they haven’t had to make since March 2020.
“I will probably go back to waitressing part-time to pay off my loans just so my interests don’t multiply,” Martha Hernandez, a hospital worker in Olympia, Washington, told Time.
With payments set to resume in a couple of months or so, there are things you should do to prepare. The Consumer Finance Protection Bureau recommends the following:
- Make sure your contact info is accurate. When the pause ends, you’ll get a billing statement or other notice at least three weeks before your payment due date. Check and update your contact information on your StudentAid.gov profile and with your student loan servicer. Your servicer is the company that you send (or will send) your student loan payments to each month.
- Research your options if you can’t afford payments. For federal loans, options include income-driven repayment plans that provide payments as low as $0, depending on your income or family size. If you already have an income-driven repayment plan but your income or family size has changed, ask your servicer to recalculate your monthly payment. If you still can’t afford your payment and you only need a temporary pause on payments, consider a deferment or forbearance.
- Watch out for scams: Scammers have targeted student loan borrowers to take advantage of circumstances related to the pandemic and government relief packages. If someone contacts you and asks for personal information or money to suspend your student loan payment or cancel your student loan debt, it’s a scam. Don’t provide personal, financial or student aid information to anyone you don’t know or trust.