By: AP/News
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.
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.
“Then you’ve maintained the habit of making the payment, but (you’re) earning a little bit of interest as well,” she said.
Mayotte recommends borrowers use the loan-simulator tool at StudentAid.gov or the one on TISLA’s website 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 you’re enrolled in the best income-driven repayment plan.
WHAT IF I CAN’T OR DON’T WANT TO PAY?
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