What to do now ahead of student loan pause ending

(The Hill) - After three years, the student loan payment pause is officially ending for 40 million borrowers.

The cycle of extensions for the payment pause, which began under then-President Trump during the coronavirus pandemic in 2020, finally met its end under the bipartisan debt ceiling agreement negotiated by President Biden and Speaker Kevin McCarthy (R-Calif.). Biden signed the measure on Saturday.

The pause will now end 60 days after June 30, giving borrowers nearly three months to prepare. 

Here is what borrowers should begin to do:

Confirm your student loan servicer and the amount owed

It has been a long time since some users checked on their student loan accounts, while many graduated during the pandemic and are logging in for the first time. 

Borrowers can log in to the Federal Student Aid website to check on which servicer holds their loans. 

Even if users were paying loans before the pause, it is important to check because some servicers dropped their federal contracts and many borrowers had their accounts transferred to another. 

Once borrowers figure out who their servicer is, they will be able to check on their account balance to see how much debt and interest is still owed.

Speak with your student loan servicer

Past the basics, it is essential borrowers begin talking to thei loan servicers now about their debt and their options for repayment. 

Servicers have been warning for months they do not have sufficient resources to restart student loans. 

“The department has meaningfully reduced the amount of resources we have and people we can put on the phones. That’s going to be a challenge where we will probably have longer hold time, and processing time for requests and applications could take a lot longer than usual,” Scott Buchanan, executive director for Student Loan Servicing Alliance, previously told The Hill.

The Department of Education has pointed the finger at Congress for inadequate funding, but Buchanan says there is still money going to other programs where it is not needed.  

Once a person is able to get through to their student loan provider, they can talk about different repayment options and what they qualify for based on their income. 

They will also be able to talk about the exact day student loan repayments will resume with their servicer.

Look through your payment plan options

The federal government offers multiple repayment options depending on an individual’s income level and profession. 

The Department of Education has a loan simulator that can give options if borrowers are struggling to make their monthly payments. A user can look through and decide on options by themselves, with their loan servicers or get a financial adviser.

The department “will give students and borrowers the time they need to plan for restart and ensure a smooth pathway back to repayment,” Education Secretary Miguel Cardona has said. 

Even if you had a certain payment plan set up before the pause began, it is important to be on top of the best repayment options if a financial situation has changed. 

And some options could be changing soon, such as income-driven repayment (IDR) plans. If the department’s plans are approved, some borrowers that qualify might not have to pay anything each month. The changes would also shorten the time a borrower needs to repay in order to earn loan forgiveness. 

Another option that could lead to debt relief is the Public Service Loan Forgiveness program, which allows government employees and some who work for nonprofits to get their loans forgiven after 10 years of payment. 

Biden’s student loan relief proposal is still at play

While some are skeptical, there is still a long shot for Biden that the conservative-majority Supreme Court greenlights his student debt relief plan. 

The proposal would give borrowers making less than $125,000 a year $10,000 in student debt relief. Those who had Pell Grants in school making less than $125,000 would get $20,000 in relief. 

While Biden has framed the debt ceiling agreement that ends the pause as a win because it did not include slashing his student debt relief plan, advocates think that point is mute considering it is likely the plan will get the axe. 

Biden has admitted it's easy to see the high court tossing his proposal.

"I'm confident we're on the right side of the law," he previously. "I'm not confident about the outcome of the decision yet."

The Biden administration argued in front of the high court if payments are resumed without debt relief, it could lead many to default on their loans. 

The Supreme Court is expected to have a decision on student debt relief by the end of the month.