Shortly after the Supreme Court makes its expected ruling on the Biden administration’s sweeping student debt forgiveness plan, the loan bills are expected to resume.
The U.S. Department of Education has said payments would be due again 60 days after the litigation over its student loan forgiveness plan resolves. If the legal issues over the administration’s relief are still unfolding by the end of June, or if it’s not allowed to move forward with forgiving student debt by then, payments will pick up at the end of August.
Getting used to a student loan payment again — the average bill is around $400 a month — will likely not be easy for many borrowers. The bills have been on hold, after all, for more than three years.
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Still, there are steps you can take to be more prepared, experts say.
Know your lender
During the pandemic, a number of the largest companies that service federal student loans announced they’ll no longer be doing so, meaning many borrowers will have to adjust to a new servicer when payments resume.
Three companies that serviced federal student loans — Navient, the Pennsylvania Higher Education Assistance Agency (also known as FedLoan) and Granite State — all said they’d be ending their relationship with the government.
As a result, around 16 million borrowers will have a different company to deal with by the time payments resume, or not long after, according to higher education expert Mark Kantrowitz.
Double-check that your servicer has your current contact information, so that you receive all the notices about the upcoming change, experts say.
Impacted borrowers should get multiple notices, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.
If you mistakenly send a payment to your old servicer, the money should be forwarded by the former servicer to your new one, Buchanan said.
Find an affordable repayment option
Many people’s lives have been changed by the pandemic. If your circumstances look different than they did three years ago, it may make sense to review the payment plans available to you and find one that’s the best fit for your current situation.
In the meantime, the law has also changed.
Student loan forgiveness is now tax-free until at least 2025, thanks to a provision included in the $1.9 trillion federal coronavirus stimulus package that President Joe Biden signed into law in March of 2021. That policy will likely become permanent.
That may make income-driven repayment plans more appealing, since they often come with lower monthly bills and borrowers will likely no longer be hit with a massive tax bill at the end of their 20 years or 25 years of payments.
But if you can afford it, the standard repayment plan is just 10 years.
To calculate how much your monthly bill would be under different plans, use one of the calculators at Studentaid.gov or Freestudentloanadvice.org, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.
If you do decide to change your repayment plan, Mayotte recommends submitting that application with your servicer before payments turn back on.
“I have significant concerns that there will be some big servicing delays,” she said.
Have a plan if you can’t make payments
If you’re unemployed or dealing with another financial hardship, you’ll have options when payments resume.
First, put in a request for the economic hardship or the unemployment deferment, experts say.
Those are the ideal ways to postpone your federal student loan payments because interest usually doesn’t accrue under them, as long as they’re subsidized undergraduate student loans.
If you don’t qualify for either, though, you can use a forbearance to continue suspending your bills. But keep in mind that interest will rack up and your balance will be larger – sometimes much larger – when you resume paying.