How the Supreme Court student loan decision affects you
The Supreme Court has ruled the Biden administration overstepped its authority in trying to cancel or reduce student loan debt, effectively killing the $400 billion plan, which would have canceled up to $20,000 in federal student loans for 43 million people. Of those, 20 million would have had their remaining student debt erased completely.
The court's decision means, barring an act of Congress, those Americans are on the hook for payments starting in October.
Still, borrowers who are worried about their budgets do have options. For instance, the government has other loan forgiveness programs that are still in effect, even if Biden's plan was struck down. Biden also on Friday announced additional efforts to bring relief to borrowers.
Here's what to know about how the decision will affect you:
When will student loan payments resume?
Student loan payments that have been frozen for the last three years because of the pandemic are set to restart in October. That was going to happen no matter what the Supreme Court decided. Interest will start accruing Sept. 1.
How should I prepare?
Betsy Mayotte, president of the Institute of Student Loan Advisors, encourages people not to make any payments until the pause has ended. Instead, she says, put what you would have paid into a savings account.
바카라 게임 웹사이트Then you바카라 게임 웹사이트ve maintained the habit of making the payment, but (you바카라 게임 웹사이트re) earning a little bit of interest as well,바카라 게임 웹사이트 she said.
Video below: Biden on student loan forgiveness plan being stuck down by SCOTUS
Mayotte recommends borrowers use the loan-simulator tool at or the to find a payment plan that best fits their needs. The calculators tell you what your monthly payment would be under each available plan, as well as your long-term costs.
Katherine Welbeck of the Student Borrower Protection Center recommends logging on to your account and making sure you know the name of your servicer, your due date and whether you바카라 게임 웹사이트re enrolled in the best income-driven repayment plan.
What if I can't or don't want to pay?
Hours after the Supreme Court decision, President Joe Biden announced a 12-month grace period to help borrowers who struggle after payments restart. Biden said borrowers can and should make payments during the first 12 months after payments resume, but, if they don바카라 게임 웹사이트t, they won바카라 게임 웹사이트t be at risk of default and it won바카라 게임 웹사이트t hurt their credit scores. But details about this plan have yet to be released.
After that grace period, if you바카라 게임 웹사이트re in a short-term financial bind, you may qualify for deferment or forbearance 바카라 게임 웹사이트 allowing you to temporarily suspend payment.
To determine whether deferment or forbearance are good options for you, you can contact your loan servicer. One thing to note: interest still accrues during deferment or forbearance. Both can also impact potential loan forgiveness options. Depending on the conditions of your deferment or forbearance, it may make sense to continue paying the interest during the payment suspension.
Are there any other programs that can help with student loan debt?
If you바카라 게임 웹사이트ve worked for a government agency or a nonprofit, the Public Service Loan Forgiveness program offers cancellation after 10 years of regular payments, and some income-driven repayment plans cancel the remainder of a borrower바카라 게임 웹사이트s debt after 20 to 25 years.
Video below: Smart money moves for college grads
Borrowers should make sure they바카라 게임 웹사이트re signed up for the to qualify for these programs.
Borrowers who have been defrauded by for-profit colleges may also apply for borrower defense and receive relief.
These programs aren바카라 게임 웹사이트t be affected by the Supreme Court ruling.
What's an income-driven repayment plan?
An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size. It takes into account different expenses in your budget, and most federal student loans are eligible for at least one of these types of plans.
Generally, your payment amount under an income-driven repayment plan is a percentage of your discretionary income. If your income is low enough, your payment could be as low as $0 per month.
If you바카라 게임 웹사이트d like to repay your federal student loans under an income-driven plan, the first step is to .
How can I reduce costs when paying off my student loans?
바카라 게임 웹사이트 If you sign up for automatic payments, the servicer takes a quarter of a percent off your interest rate, Mayotte says.
바카라 게임 웹사이트 Income-driven repayment plans aren바카라 게임 웹사이트t right for everyone. That said, if you know you will eventually qualify for forgiveness under the Public Service Loan Forgiveness program, it makes sense to make the lowest monthly payments possible, as the remainder of your debt will be cancelled once that decade of payments is complete.
바카라 게임 웹사이트 Reevaluate your monthly student loan repayment during tax season, when you already have all your financial information in front of you. 바카라 게임 웹사이트Can you afford to increase it? Or do you need to decrease it?바카라 게임 웹사이트 Mayotte said.
바카라 게임 웹사이트 Break up payments into whatever ways work best for you. You could consider two installments per month, instead of one large monthly sum.
Is there any chance for another loan forgiveness attempt?
Biden바카라 게임 웹사이트s administration plans to pursue student debt cancellation with a different legal justification than the one struck down by the Supreme Court. The White House hopes to provide relief instead by using the Higher Education Act, a broad federal law that governs the student loan program. Exactly who would be eligible and how much would be canceled will be decided through a federal rule-making process. But that process can take months, or even longer, so this attempt at cancellation won바카라 게임 웹사이트t come quickly.
Wait, can he do that?
Biden바카라 게임 웹사이트s new legal justification for broad debt cancellation takes the same approach long proposed by Sen. Elizabeth Warren and borrower advocates. It uses a provision of the Higher Education Act allowing the Education Secretary to 바카라 게임 웹사이트compromise, waive or release바카라 게임 웹사이트 student loans. It바카라 게임 웹사이트s the same basis the Biden administration used last year to forgive $6 billion in loans for borrowers who were deceived by their colleges.
The details of the new forgiveness will be negotiated through a federal rulemaking process the administration launched on Friday. The process, which can take many months, allows the Education Department to write or change federal regulation that carries the weight of law.
But there바카라 게임 웹사이트s no guarantee the plan could survive another legal challenge. The Higher Education Act has been used to cancel student debt, but never at this scale. Education lawyers for the Trump administration concluded in 2021 that the education secretary 바카라 게임 웹사이트does not have statutory authority to provide blanket or mass cancellation바카라 게임 웹사이트 under the act.
___
Binkley reported from Washington.