The Supreme Court may rule soon on student debt relief. Here’s how to prepare.

The finances of about 40 million Americans with college loans are hanging in the balance as borrowers await the Supreme Court’s ruling on the legality of President Biden’s plan to forgive up to $20,000 in student debt.

Borrowers could face a double whammy this summer if the Supreme Court rules against the debt-forgiveness plan, as the court’s decision is likely to land just before the pause on debt repayment lifts in September. In the worst case scenario, borrowers will face restarting their loan payments in September without any debt relief, experts note.

The Biden plan, announced last August, could wipe out the student-loan debt of 20 million Americans, while lowering the balances of those among the remaining 20 million who qualify for the relief. But legal challenges claimed President Joe Biden exceeded his authority in developing the debt-forgiveness program, which was halted before it could deliver any relief to student borrowers. 

The dispute has placed student borrowers in a bind and raises questions about how they should prepare for both the Supreme Court’s ruling as well as the resumption of student loan repayments. 

Borrowers “need to protect themselves and be prepared for whatever may come,” said Michele Shepard, senior director of college affordability at The Institute for College Access & Success, an advocacy group for affordable higher education. “Be prepared for the worst case scenario if their balance doesn’t go down and repayments start in the fall.”

Here’s what experts advise on how to prepare. 

Figure out which servicer has your loan

Student-loan repayments are slated to restart on September 1 under the deal negotiated by the Biden administration and lawmakers, which was signed into law earlier this month. 

That comes after repayments were put on hold, and interest rates were set to 0%, starting in March 2020 due to the pandemic. In other words, millions of Americans with student loans haven’t had to make a payment in more than three years. 

The first step in preparing to resume repayments is to log into your account at the Federal Student Aid website, which will tell you which servicer is handling your loans. Some people may learn that their servicers have changed since March 2020, Shepard said. 

Next, make sure you can log into your account with the servicer. 

“It’s as simple as making sure you have the information to log into your student loan account,” she noted.  “We are hearing people haven’t had to log in for a few years and can’t remember how to log in, and then they have to call someone and there is an hour-long hold to reset their password.”

Check your balance and payment amount

Next, figure out what your balance is and how much you’ll be on the hook for in September. Experts advise planning on having to repay your entire balance, given that the Biden loan-forgiveness plan is currently in limbo. 

“Look at your loan status, your interest rate, and see what is your repayment plan. Do that as much as possible in advance,” Shepard advised. “You won’t regret being prepared.”

Consider switching your repayment plan

It might make sense for some borrowers to switch to a different type of repayment plan, depending on their financial situation, Shepard noted. 

For instance, an income-driven repayment plan, or IDR, can be helpful because they peg borrowers’ payments to their monthly income. About one-third of all borrowers are enrolled in an IDR, according to Pew Research. 

Student debt holders can use a loan simulator at the Federal Student Aid site to figure out which plan is best for them. 

The most generous plan is called the Revised Pay As You Earn, or REPAYE, program, which was first introduced in 2016. Also, the Biden administration is overhauling the program to add more borrower-friendly terms. However, that overhaul isn’t yet complete, Shepard noted. Even so, the REPAYE plan could work for some borrowers.

“The only real downside is because your monthly payments are lower, you could pay more over the life of the loan because your interest will be accruing,” she noted. 

Be ready to act if the Supreme Court upholds debt forgiveness

Lastly, experts say to be ready to act if the Supreme Court rules in favor of debt forgiveness. 

About 16 million people were approved for Biden’s debt forgiveness plan before the program was halted due to the legal challenges. Those people would hopefully see debt relief quickly if the court rules in favor of the program, noted Persis Yu, deputy executive director of the Student Borrower Protection Center (SBPC), an advocacy group for people with student debt.

Another several million people had also applied but weren’t approved before the program was halted, she noted. And millions more have yet to apply. Those people should act quickly if the program is reinstated, especially given that repayments begin on September 1.

“We hear time and time again the devastation that student debt is causing people’s lives,” Yu said. “Having this debt relief would be life-changing.”