A sharply divided Supreme Court ruled Friday that the Biden administration overstepped its authority in trying to cancel or reduce student loans for millions of Americans.The 6-3 decision, with conservative justices in the majority, effectively killed the $400 billion plan, announced by President Joe Biden last year, and left borrowers on the hook for repayments that are expected to resume by late summer.The court held that the administration needs Congress' endorsement before undertaking so costly a program. The majority rejected arguments that a bipartisan 2003 law dealing with student loans, known as the HEROES Act, gave Biden the power he claimed.“Six States sued, arguing that the HEROES Act does not authorize the loan cancellation plan. We agree,” Chief Justice John Roberts wrote for the court.Justice Elena Kagan wrote in a dissent, joined by the court’s two other liberals, that the majority of the court “overrides the combined judgment of the Legislative and Executive Branches, with the consequence of eliminating loan forgiveness for 43 million Americans.”Loan repayments are expected to resume by late August under a schedule initially set by the administration and included in the agreement to raise the debt ceiling. Payments have been on hold since the start of the coronavirus pandemic more than three years ago.The forgiveness program would have canceled $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, would have had an additional $10,000 in debt forgiven.Twenty-six million people had applied for relief and 43 million would have been eligible, the administration said. The cost was estimated at $400 billion over 30 years.

Despite a recent court ruling, President Joe Biden said he expects the federal government will be able to start forgiving student loans soon despite a recent temporary stay issued by a court.

Biden told Reshad Hudson, a reporter for Nexstar, “We’re going to win that case. I think in the next two weeks, you’re going to see those checks going out.”

Relief for students was expected to be in place before the resumption of federal student loan payments in January. The White House has continued to encourage federal student loan borrowers to apply for forgiveness as the legal process plays out.

A judge ordered last week a temporary stay on Biden’s plan to forgive up to $20,000 in student loans.

The judge’s stay came after six Republican-led states filed a lawsuit attempting to stop Biden’s plan from going into effect. A lower court had ruled the states did not have standing, but an appeals court granted the stay.

The stay is not a final decision on it but allows the court time to review the case before allowing the administration to execute the student loan forgiveness. The White House stressed that the order was “temporary.”

The six states say that Biden’s plan is too costly. The Congressional Budget Office said the cost for the government to forgive student loans is an estimated $400 billion.

“A significant majority of Americans have already paid off their student loans or chose not to pursue higher education at all,” said Iowa Gov. Kim Reynolds. “By forcing them to pay for other people’s loans – regardless of income – President Biden’s mass debt cancellation punishes these Americans and belittles the path they chose. This expensive, unlawful plan is an insult to working people and must be stopped.”

Proponents of student loan forgiveness point out the rising cost of education in recent decades. The cost of tuition at a public four-year university in 2020-21 averaged $9,400, up from $8,500 from a decade earlier, when adjusted for inflation.

Government data shows that in the last three decades, the cost of attending a public university, which is generally far more affordable than a private one, has doubled. In the last 40 years, the cost has tripled.

A student attending a public university from 2017-21 would be expected to pay $38,093 in tuition and mandatory fees, in 2021 dollars. A person who attended a public university in 1977-81 would have been expected to pay $10,335 in 2021 dollars.

Biden's plan calls for borrowers with incomes of up to $150,000 to receive up to $10,000 in federal student loan forgiveness. That amount increases to $20,000 for borrowers who received pell grants.

President Biden announced on Jan. 20 that most federal student loan payments would be suspended interest-free through September 2021 due to the ongoing pandemic.

Once the suspension lifts, though, a $0 payment still may be a necessity for some borrowers.

According to an October 2020 survey from NerdWallet conducted by The Harris Poll, 45% of Americans with federal student loans of their own weren’t confident they’d be able to afford their loan payments when the payment freeze was scheduled to end last December.

Borrowers will hopefully be better off financially by September. But if you’ll need to keep paying less, here are your options.

Enroll in income-driven repayment

For a manageable payment, start with an income-driven repayment plan.

“Look at income-driven repayment first because it offers the most benefits,” says Persis Yu, director of the nonprofit National Consumer Law Center’s Student Loan Borrower Assistance Project.

Those benefits can include forgiveness after 20 or 25 years of payments, partial interest subsidies and monthly bills as low as $0.

Payments are based on adjusted gross income, family size and federal poverty guidelines. For example, if you had an AGI of $19,000, were single and lived in the lower 48 states, you’d pay $0 for 12 months under most income-driven plans.

If you already use one of these plans and your income has decreased, your payments can too.

“It’s important for borrowers to realize that they can ask to have their plans recertified at any time,” Yu says.

You can estimate payments under different income-driven plans with the Department of Education’s Loan Simulator.

Defer student loan payments

Federal student loan payments can be paused via deferment and forbearance.

Deferment is tied to events like losing your job or undergoing cancer treatment. If you’re eligible, this option can keep payments at $0.

For example, an unemployment deferment may be possible if you work fewer than 30 hours per week. If your hours were cut, but your household’s earnings are too high for an income-driven plan, deferment may make sense.

The government also covers all the accruing interest on subsidized loans during deferment.

“There are some subsidies on income-driven plans, but they’re more generous with deferment,” says Betsy Mayotte, president and founder of The Institute of Student Loan Advisors, a nonprofit that offers borrowers free advice.

Deferment is often available for up to three years, but you have to reapply periodically. For an unemployment deferment, the duration is every six months.

Place loans in forbearance

Payments are currently suspended interest-free via a special administrative forbearance. When that break ends, your servicer can grant you a discretionary forbearance, potentially without paperwork.

But besides no bills, that type of forbearance offers few benefits.

“Forbearance is a last resort,” Mayotte says. “It’s either that or you’re going to go delinquent or default.”

Interest usually accrues during forbearance. When it ends, that interest can be added to the amount you owe, meaning future interest grows on a bigger balance.

With any $0 payment strategy, it’s possible you’ll repay more overall.

“If you can afford it, I would always recommend paying versus not paying,” Mayotte says.

Getting ready

The most important thing to do now is understand your options, says Scott Buchanan, executive director of the Student Loan Servicing Alliance, a nonprofit that represents student loan servicers.

In part, that’s because servicers can’t change your payments yet.

“It’s a matter of regulation and process,” Buchanan says. “We can’t actually put you into (a) plan right now because you’re not in repayment.”

But you can do the following:

• Check your info. Log on to your servicer’s website to check your contact information and payment amount. If you’re not sure who your servicer is, visit the Federal Student Aid website. Mayotte says to beware of companies reaching out and offering help for a fee; your servicer will never charge you.
• Gather paperwork. Applications can require documentation like pay stubs, which Buchanan says must be from the past three or four months when you submit your forms. If you applied now, you’d likely have to do so again with more current information. But you can get a head start by figuring out what you’ll need and filling out what you can.
• Set a reminder. With payments set to resume in October, plan to submit your requests over the summer.

“If you wait until the day before your due date in the month when 30 million people are going into repayment,” Buchanan says, “call times are going to be long.”
This article was written by NerdWallet and was originally published by The Associated Press.

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Ryan Lane writes for NerdWallet. Email: rlane@nerdwallet.com.