How to start paying back student loans

NEW YORK — A three-year pause on student loan payments will end this summer regardless of how the Supreme Court rules on the White House plan to forgive billions of dollars in student loan debt.

If Congress approves a debt ceiling deal, payments will resume in late August, ending any lingering hope of a further extension of the pause that started during the COVID-19 pandemic. Even if the deal falls through, payments will resume 60 days after the Supreme Court decision.

Here’s what to know to get ready to start paying back loans:

How should I prepare for payments to restart?

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. “There’s no reason to send that money to the student loans until the last minute of the 0% interest rate.”

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.

What’s an income-driven repayment plan?

An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size. It takes into account different expenses in your budget, and most federal student loans are eligible for at least one of these types of plans.

What if I can’t pay?

If your budget doesn’t allow you to resume payments, it’s important to know how to navigate the possibility of default and delinquency on a student loan. Both can hurt your credit rating, which would make you ineligible for additional aid.

If you’re in a short-term financial bind, according to Mayotte, you may qualify for deferment or forbearance — allowing you to temporarily suspend payment.

To determine whether deferment or forbearance are good options for you, you can contact your loan servicer. One thing to note: interest still accrues during deferment or forbearance. Both can also impact potential loan forgiveness options.

Are student loans forgiven after 10 years?

If you’ve worked for a government agency or a nonprofit, the Public Service Loan Forgiveness program offers cancellation after 10 years of regular payments, and some income-driven repayment plans cancel the remainder of a borrower’s debt after 20 to 25 years. Borrowers should make sure they’re signed up for the best possible income-driven repayment plan to qualify for these programs. Borrowers who have been defrauded by for-profit colleges may also apply for borrower defense and receive relief. These programs won’t be affected by the Supreme Court ruling.