Borrowers Should Prepare to Start Paying Their Student Loans This Summer. Many Aren’t Ready

Student loan payments are set to resume 60 days after the Supreme Court’s decision on the Education Department’s student loan relief plan that was set to forgive up to $20,000 per borrower, meaning millions of Americans could have to start their monthly payments in August or sooner.

After Tuesday’s oral arguments, legal experts told TIME it is increasingly likely loan forgiveness will get thrown out by the conservative majority court. The restart of student loan payments would come at a time of high stress for many Americans. Elevated inflation has led to increased car prices, record high global food prices and housing costs that while cooling is still high, in 2022.

More than 26 million Americans applied for student loan relief after applications opened in October 2022. Some 16 million were approved for forgiveness, though legal challenges have stopped any of them from seeing their loan balances reduced.

Many borrowers are notably concerned about the future. Marema Lo, a 24-year old investment bank worker, understands that the payments cannot be paused forever, but says it is a bit “frustrating” to have a 60-day payment notice “set in stone.”

“If the court rules against this forgiveness plan, it would be nice to have another extension especially considering how ridiculous inflation and everyday costs are right now,” Lo tells TIME.

The relief program would forgive up to $20,000 in debt for Pell Grant recipients who meet income eligibility requirements, and $10,000 for others, affecting the 45 million people who collectively owe $1.6 trillion in federal student loans. Forty million borrowers were expected to receive some relief.

“Our Administration is confident in our legal authority to adopt this plan, and today made clear that opponents of the program lack standing to even bring their case to court,” the Department of Education said in an email to borrowers on Wednesday. “While opponents of this program would deny relief to tens of millions of working-and middle-class Americans, we are fighting to deliver relief to borrowers who need support as they get back on their feet after the economic crisis caused by the pandemic.”

But the Biden administration seems to have put all their eggs in one basket, as the White House admitted on Wednesday it currently has no contingency plans in place should loan-relief be struck down.

Read More: When To Refinance Student Loans?

“Our focus right now is getting this done,” Press Secretary Karine Jean-Pierre said in a press briefing on Wednesday when asked what the administration would do if Biden’s debt relief program is deemed unconstitutional.

The Department of Education also did not specifically respond to TIME’s questions about whether the payment pause could be extended once more, or whether they intend to pursue other avenues for possible loan forgiveness if the current program is blocked by the Supreme Court.

Some borrowers said they will have to implement lifestyle changes once payments resume. “I will probably go back to waitressing part-time to pay off my loans just so my interests don’t multiply,” Martha Hernandez, a 23-year-old hospital worker in Olympia, Wash., tells TIME. Hernandez, who is eligible for $20,000 in forgiveness under the debt relief plan, would see her debt decrease to $2,000 if the loan-relief is implemented.

Regardless, student loan borrower advocacy groups believe this will have a tremendous effect on the lives of millions, citing fears of high default and delinquency rates once payments resume.

Persis Yu, Managing Counsel and Deputy Executive Director at Student Borrower Protection Center, analogizes the situation to a fire. “Just because the fire is not still burning, doesn’t mean that you don’t still have cleanup,” Yu tells TIME. “Even if the national emergency is over, there are still additional steps that we need to take to make sure that people can land on their feet.”

The percentage of student loan borrowers who defaulted on their student loans since the pandemic has only risen over time, according to research from the Consumer Financial Protection Bureau. And credit card delinquency rates are also on the rise, showing how difficult things may become for Americans who are relying on loan forgiveness.

Famata Jalloh, a 25-year-old campaign associate based in Washington, D.C., says that she had no other choice but to take out student loans as a first generation college student who saw a higher education degree as an investment in her future.

“Coming from an immigrant family that had no idea about the interest and how predatory some of these loans are. It was like, well, like that’s just your choice,” she tells TIME.

Jalloh, who is recently engaged, says that loan forgiveness would have been “life changing.” She hopes the Biden administration explores other avenues to forgiveness should the loan-relief program get shut down. “I’m going to keep fighting with folks on the ground who want to make this happen,” Jalloh says.