Will millions of student loan borrowers soon have to start making payments on their outstanding debt? That’s the big question that comes to mind as the Supreme Court contemplates the legality of Biden’s student loan forgiveness program.
In fact, the Supreme Court is expected to release more opinions on Thursday on the matter, and naturally, those impacted are anxious to hear a verdict. But it’s important to brace for the worst-case scenario, just in case.
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Loan payments could resume without relief
If Biden’s student loan forgiveness plans are completely shut down by the Supreme Court, more than 40 million student loan borrowers may have to start repaying their debt on a monthly basis as soon as early September. Given that many student loan borrowers have not had to make a payment on their debt for over three years, that’s a tough adjustment.
Not only that, but some people may have had their student loan debt servicers change over the course of the past three years. So borrowers in that situation may need to do some digging to figure out where to begin making payments again.
How to prepare for student loan payments to start again
There’s a good chance student loan payments will become mandatory beginning in September. That’s not so far away. So if you want to avoid a financial shock, do your best to sock away a bit of extra money between now and then so you have a cushion to fall back on. At the same time, start shedding some non-essential expenses so you have room in your budget for those loan payments once they resume.
If you’re certain you absolutely won’t be able to make student loan payments based on your current income and expenses, now’s a good time to turn to the gig economy. If you pick up a second job now, you might manage to line up a nice stream of steady income so you can cover your loan payments.
Before you resign yourself to a given monthly loan payment, explore your options for switching your repayment plan. You may be able to apply for an income-based repayment plan, for example, where your monthly payments are based on your specific earnings. Or, you may be eligible for an extended repayment plan that results in lower monthly payments.
Of course, one thing you should know is that the lower your individual monthly loan payments are, the more interest you might end up paying in the course of whittling down your student loan balance. But that may be an unavoidable thing if you simply can’t afford higher monthly payments.
All told, student debt is a major burden for a lot of people. Unfortunately, millions of borrowers might soon be on the hook for a payment every month after an extended reprieve. Make sure to prepare for that possibility — even if you’d rather think positively and hope for the best. The last thing you want is to find yourself facing monthly student loan payments you’re in no way equipped to keep up with.
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