When the Biden administration announced plans to forgive student debt, many borrowers were no doubt ecstatic. But those plans were just dealt a pretty solid blow.
On June 30, the Supreme Court blocked Biden's student loan forgiveness plan, leaving millions of borrowers on the hook for payments they were hoping would go away. Under Biden's plan, up to $20,000 per borrower had the potential to be forgiven.
Clearly, this isn't the news Americans with student loan debt wanted to hear. But it's important to face the reality that you may end up having to pay back your student loans in full. If you're worried about managing your payments, then it's worth looking into the different repayment plans that may be available to you.
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You may have a better repayment option
One of the benefits of taking out federal student loans, as opposed to private ones, is that you're eligible for certain protections. Federal loan borrowers, for example, can request forbearance during periods of financial hardship.
Another perk of having federal student loans is that you may be eligible for a different repayment plan than the one you're already on. If you're on the standard repayment plan, it means you're looking at a 10-year time frame for shedding your student debt.
While there's a benefit to not having your loans drag on beyond that point, if you can't swing your monthly payments under the standard arrangement and you're not a particularly high earner, it could make sense to apply for an income-driven repayment plan instead. This makes it so your monthly student loan payments are based on your specific income.
There are also extended student loan repayment options you can look at that could result in lower monthly payments on an individual basis, making your debt more manageable. You may, in fact, be eligible to pay off your federal student loans over a 25-year time frame.
Just know, however, that prolonging your student loan payoff could mean accruing a lot more interest on your debt over time. So while you might make your life easier on a month-to-month basis, you might also end up parting with more money overall.
Finally, do remember that there are still student loan forgiveness programs in place that have nothing to do with the Supreme Court's recent decision. These programs tend to have strict criteria, but if you work in public service, you may be eligible to have some of your debt wiped away.
Some income-based repayment plans also have loan forgiveness built in if your debt isn't fully repaid after a specific period of time. So you may still be eligible to have your loans forgiven -- eventually.
All told, a lot of people were skeptical as to whether the Biden administration was really going to manage to forgive a massive chunk of student loan debt. Although that fight may not be over, for now, student loan forgiveness is off the table. But that doesn't mean your monthly finances immediately have to suffer.
