The Supreme Court’s Ruling and Student Loan Repayments: What You Need to Know

Introduction: The financial future of approximately 40 million Americans hangs in the balance as they await the Supreme Court’s decision regarding the legality of President Biden’s plan to forgive up to $20,000 in student debt. If the court rules against the debt-forgiveness plan, borrowers could face a challenging situation as they resume loan repayments in September without any relief. In this blog post, we will explore how borrowers can prepare for potential outcomes and offer expert advice on navigating the situation.

1. Identify your loan servicer: To prepare for loan repayments, the first step is to log into your account on the Federal Student Aid website and determine which servicer is handling your loans. Some borrowers may discover that their loan servicers have changed since March 2020 when repayments were put on hold due to the pandemic.
2. Ensure access to your account: Make sure you have the necessary information to log into your student loan account. If you haven’t accessed your account in years and can’t remember the login details, it’s essential to reset your password well in advance. Waiting on hold for an hour to reset your password is an inconvenience that can be avoided with a little preparation.
3. Check your balance and payment amount: Given the uncertain status of the Biden loan-forgiveness plan, it is advisable to assume you will have to repay your entire balance. Review your loan status, interest rate, and repayment plan ahead of time. By doing so, you will gain a clear understanding of your financial obligations and avoid any surprises when repayments resume.
4. Consider switching repayment plans: Depending on your financial situation, switching to a different repayment plan might be a wise decision. An income-driven repayment plan (IDR) can be particularly helpful as it aligns your payments with your monthly income. The Revised Pay As You Earn (REPAYE) program, which is currently being improved by the Biden administration, could be an option worth exploring. However, keep in mind that lower monthly payments in the REPAYE program may result in accruing more interest over the life of the loan.
5. Be prepared for debt forgiveness: While it remains uncertain, there is speculation that the Supreme Court may rule in favor of debt forgiveness. If this happens, be ready to act swiftly. Those who were approved for Biden’s debt forgiveness plan before its suspension should expect relief quickly if the court reinstates the program. Individuals who had applied but were not approved and those who have yet to apply should be prepared to act promptly if the program resumes. The potential reinstatement of the debt forgiveness plan would bring life-changing relief to millions of borrowers burdened by student debt.

Conclusion: As the Supreme Court’s ruling on student loan forgiveness approaches, borrowers with college loans should take proactive steps to prepare for various outcomes. By identifying loan servicers, ensuring access to loan accounts, understanding repayment obligations, considering different repayment plans, and being ready to act if debt forgiveness is upheld, borrowers can navigate the uncertain landscape with greater confidence. While the situation may seem daunting, being informed and prepared will help protect the financial well-being of those affected by student debt.