The Supreme Court has ruled to strike down President Biden’s student loan forgiveness program, which would have canceled up to $20,000 of debt for roughly 43 million eligible borrowers. In his majority opinion, Chief Justice Roberts found that Biden’s student loan forgiveness program exceeds the Education Department’s legal authority.

Biden’s student debt program would have canceled roughly $430 billion in student loan debt, and 26 million borrowers had already applied for the program by the time it was blocked in October. Now that the program has been officially struck down, those borrowers will have to begin repaying their student loans without relief.

What did the Supreme Court say about student loan forgiveness?

The Supreme Court ruled in a 6-3 decision that the Biden administration does not have the authority to forgive student loans without an act from Congress. In the decision written by Justice Roberts, it says, “The HEROES Act allows the Secretary [of Education] to ‘waive or modify’ existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act but… does not allow the Secretary to rewrite that statute to the extent of canceling $430 billion of student loan principal.”

The Supreme Court said that such an expensive and broad plan couldn’t use the in-place policy to deal with national emergencies. The HEROES Act originally was meant to financially protect service members while they fought in Afghanistan and Iraq but has been used during the COVID-19 pandemic for actions such as the pause on student loan payments.

“Six States sued, arguing that the HEROES Act does not authorize the loan cancellation plan. We agree,” Roberts wrote. Any broad forgiveness plan would need to be approved by Congress.

What does this mean for student loan borrowers?

While the Biden administration will attempt another path to forgiving student debt, borrowers should not count on relief. Instead, borrowers who are worried about their student debt should prepare to begin repayments and consider applying for an income-driven repayment plan.

Immediately after the Supreme Court decision was released, a White House source said, “While we strongly disagree with the court, we prepared for this scenario.”

When do student loan payments resume?

Federal student loans will begin accruing interest again on September 1st, 2023 and payments will officially restart in October. This timeline was established as part of the debt ceiling deal on June 2nd and will not be extended again. It is important that borrowers start preparing for repayment as early as possible. Once payments restart, student loan servicers will likely be overwhelmed with calls, and it may be more difficult to get information and help.

To prepare for the restart of student loan payments, borrowers should make sure their information is up to date with their loan servicer and begin factoring the monthly payments into their budgets.

Today Biden announced a 12-month “on-ramp” that would help borrowers as payment restart. “This is not the same as the student loan pause that’s been in effect for the past three years,” Biden said. Monthly payments will be due, bills will not go out, and interest will be accruing. And during this period, if you can pay your monthly bills, you should. But if you cannot, if you miss payments, this ‘on-ramp’ will temporarily remove the threat of default or having your credit harmed, which can hurt borrowers for years to come.”

During that time, the Department of Education will not refer missed payments to collections or credit agencies to give borrowers a chance to ease into repayment. This plan will help prevent student loans from going into delinquency and protect borrowers’ credit for a year.

After that, borrowers in financial difficulty may qualify for student deferment or forbearance to give them more time before needing to pay their loans, although it should be used as a last resort.

Are there alternatives to student loan forgiveness?

For those that are worried about being able to make student loan payments after the three-year pause and those who were counting on Biden’s student debt plan, there are still options. The Biden administration has made changes to the Public Service Loan Forgiveness Program that make it easier for borrowers in public service fields such as nursing and teaching to pay off their loans and achieve debt relief.

Borrowers may also be eligible for the Revised Pay As You Earn Plan, an income-driven repayment plan that would lower borrowers’ monthly payments and speed up the repayment process. This is one of four income-driven repayment options offered by the Department of Education. If you are struggling financially and are worried about making student loan payments, applying for an income-driven repayment plan is likely the best option.

Biden announced today that instead of students paying no more than 10 percent of their disposable income to pay back their debt, the maximum will drop to 5%.

What happens next with student loan forgiveness?

The future of student loan forgiveness is unclear. While the Supreme Court blocked this path to forgiveness, the topic is not going to quickly leave conversations from the public or government representatives.

Biden said today, “I’m not going to stop fighting to deliver borrowers what they need, particularly those at the bottom end of the economic scale.  So, we need to find a new way.  And we’re moving as fast as we can.” Biden said he has directed his team to move as quickly as possible to pursue student loan forgiveness options through the Higher Education Act.

Today’s decision has closed one path. Now we’re going to pursue another. I’m never going to stop fighting for you. We’ll use every tool at our disposal to get you the student debt relief you need and reach your dreams. It’s good for the economy. It’s good for the country. It’s going to be good for you.

— Joe BidenPresident of the United States of America

More proposals for student loan forgiveness are likely to come in the future,  but in the meantime, borrowers should prepare to repay their loans.