What the Supreme Court’s Student-Loan Decision Means for You

Millions of Americans will have to prepare to repay the entire balance of their student debt now that the Supreme Court has overturned President Biden’s loan-forgiveness plan.

After a three-year pause in payments and months of uncertainty and legal challenges, the program won’t be allowed to move forward. The Biden administration’s forgiveness plan would have wiped out up to $20,000 in federal student-loan debt for qualified borrowers. The court ruled in a 6-3 decision Friday that the Education Department doesn’t have the authority to implement a program that would change student loans this way.

Many questions remain about the details of repayment starting. Here are some answers to borrowers’ questions about next steps.

What happens next?

Borrowers shouldn’t count on student-loan forgiveness at this point, lawyers said.

In his remarks Friday, Biden said he plans to push for student loan forgiveness again using a different legal authority, the Higher Education Act of 1956. This path will likely take longer and face renewed legal challenges.

In the meantime, focus on preparing for the resumption of payments at the end of the summer, said Heather Jarvis, a lawyer who teaches financial professionals about student loans.

When do student-loan payments resume?

All borrowers with outstanding federal student-loan balances will see interest on those loans resume as of Sept. 1, according to the Education Department. Payments will be due starting in October.

The Biden administration announced a temporary 12-month “on ramp” period following the ruling. This period, he said, will prevent those who miss payments from defaulting on their loans or having their credit adversely affected.

Loan servicers are likely to be inundated with calls from borrowers in the immediate aftermath of the decision, said Scott Buchanan,

The student-loan servicing system might also face issues with turning so many accounts back on after the long pause, Buchanan said.

“I think it could create potential for a real bottleneck come August and September,” Buchanan said.

How should I prepare financially for payments starting up again?

Make sure your account information is up-to-date. Recovering any forgotten passwords and double-checking login info can help streamline your end of the process.

Many borrowers might be understandably concerned about absorbing that monthly student-loan payment back into their budgets after a three-year pause, said Rob Williams, managing director of financial planning at

“Good financial planning is juggling priorities,” he said. “We know it becomes very difficult to then have them go away and then get back to it. That is understandably very emotionally stressful.”

Re-examine your monthly cash flow and discretionary spending to see where you can trim expenses, he said. If you aren’t yet sure how possible forgiveness or a move to another payment plan could affect your payments, contact your loan servicer.

How much will I have to pay?

Williams cautioned against planning for the lowest possible payment plan. If your payments wind up being higher than expected, you will be stuck scrambling for the cash on hand, he said.

“Plan for what you think the maximum amount would be: That would be our general recommendation to most people,” he said.

For most borrowers, this calculation should be fairly straightforward, Buchanan said: whatever their payment was before the pause, as interest hasn’t accrued and most people haven’t made voluntary payments during this three-year period.

Those who have continued making payments during the pause, or are curious about changing payment plans, should contact their loan servicer directly well in advance of the payment resumption deadline to avoid long wait times. The servicer can walk you through any potential changes, payment estimates or plan options.

The Education Department also offers a loan simulator tool that uses information such as income and family size to calculate potential monthly loan payments. From there, you can select between different repayment options and read more about how to move forward.

What are my repayment options?

Contact your loan servicer to talk out possible payment-plan options, some of which might even create a path to eventual forgiveness.

Last October, the Biden administration announced changes to the Public Service Loan Forgiveness program, or PSLF, which streamlined debt relief for workers in fields such as teaching, nursing and public-interest law. The changes would also allow borrowers who make late or partial payments to remain on track for eventual forgiveness.

Other qualified borrowers might eventually be able to take advantage of the Revised Pay as You Earn plan, a revamped income-driven repayment plan the Biden administration announced earlier this year. These new plans would calculate monthly student-loan payments based on income and family size, lower borrowers’ monthly payments and speed up the repayment process.

Under the revised plan, borrowers could pay as little as 5% of their discretionary income toward undergraduate loans. The plan also promises to eliminate remaining debt after 10 years for borrowers with balances less than $12,000.

What if I am unable to make payments at all?

The pandemic pause put all student loans in forbearance, regardless of status.

Unlike income-driven repayment plans, which allow borrowers to make smaller payments—sometimes as low as $0 a month—calculated by their family size and income, forbearance grants a reprieve from any payment at all.

Some borrowers might be unable to afford payments because of medical issues, a change in employment or other financial hardships. In these cases, Jarvis said, student-loan forbearance is still available.

“Forbearance is not often the best option, but it is an option,” she said. “The worst thing people can do is not pay attention and not make decisions based on good information.”

Those curious about forbearance must first contact their student-loan servicer and apply to see if they qualify.

After the payment and interest pause ends on Aug. 30, however, your student loan may still accrue interest during the forbearance period, which could raise the amount of money you pay over the course of the life of the loan.

—Andrew Restuccia contributed to this article.

Write to Julia Carpenter at [email protected]