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Student loan forgiveness is on hold after the court’s decision. Here’s what you should do.

The Biden administration’s plan to provide up to $20,000 in debt relief for student borrowers has now been put on hold after a federal judge in Texas blocked the program and declared it “illegal” Raising questions and financial uncertainty for the nearly 40 million Americans who qualify for debt forgiveness.

26 million people have already applied to the program since the application went out Live in October. But after the decision on Thursday, the Biden administration stopped taking applications for your student loan forgiveness program.

While the administration plans to appeal, the ruling raises questions about what might happen next once legal challenges surface, and as borrowers face financial deadlines with student loan repayment intervals expiring in December. and repayments are set to resume in January. If the appeal is not decided by then, millions could be on the hook for repayment, which they may not have anticipated.

“Student loans are one of the biggest financial stressors facing Americans right now, and it is an extremely confusing time for borrowers,” said Kristen Carlisle, general manager of Betterment at Work.

Here’s what experts think will happen next for Biden’s debt-relief program — and the steps borrowers can take.

What happens next in the legal process?

The Biden administration said it plans to appeal the decision, but the legal process could take weeks to go through. The Fifth Circuit Court of Appeals will hear the case, with Height Securities saying in a research report Friday that the court “has become arguably one of the most conservative appeals courts in the country.”

Following the decision of the Court of Appeals, both sides are likely to appeal to the Supreme Court, where Justice Samuel A. Alito, a conservative, will review the case first, Height Securities said.

The typical appeals process takes six months, but courts are accelerating the case because of its importance, said higher education expert Mark Kantrowitz. It is possible that the matter may be settled before January, when loan repayment is due to resume, but it is not certain.

It is also not certain whether the matter will be resolved in favor of the Biden administration, which also faces additional legal challenges to the debt relief program, Kantrowitz said.

Should I plan to pay off my loan in January?

Yes. Given the uncertainty over the timing of the appeal process, it would be prudent for borrowers to plan for full repayment starting January. In other words, borrowers should be prepared to pay back their loans without the forgiveness promised by the Biden administration, Kantrowitz said.

While there’s still a chance that the plan could go ahead, borrowers don’t want to risk getting caught in a financial crisis if the appeal goes ahead or it’s not resolved in the Biden administration’s favor.

“Worst case scenario, they have to start making repayments,” Kantrowitz said. “I recommend that they start planning regardless.”

I have not applied for debt relief yet. what can i do?

At the moment, there’s not much you can do if you haven’t applied for the program: The Biden administration has stopped taking applications for its student loan forgiveness program, citing a judge’s decision.

So far around 26 million people have applied, but according to various estimates, around 38 million to 40 million people may be eligible for this program. That is, 12 to 14 million people have not applied for relief yet.

Those borrowers may be most at risk of facing repayment in January, Kantrowitz said. This is because the Education Department and loan services require approximately 4-6 weeks to process applications. So, even if the court case is resolved in favor of the Biden administration before the end of November, it’s possible these borrowers will have time to process their applications before January.

“They’ll probably have a month’s pay before the pardon goes into effect,” Kantrowitz said.

Can the loan repayment interval be extended?

Kantrowitz said it remains an option for the Biden administration if the legal path goes ahead or the courts rule against the debt-relief program.

“President Biden can extend it through the rest of his term,” Kantrowitz said of the loan repayment gap. “There is very little that can be done about it. After all, it has already been extended seven times with the justification of the Heroes Act, and no one has filed a lawsuit claiming it didn’t have the right.”

Still, the Biden administration declared the last hiatus extension made in August as the “final student loan hiatus extension.” If the administration decides to extend it one more time, past actions have indicated that the effort may be coming to the wire. For example, the August extension was announced almost a week before it was scheduled to end on August 31.

How should I prepare for repayment?

Check which servitor is currently holding your loan as there have been changes during the pandemic, such as exiting the Navient student loan program.

Be aware of how much you would be owed in January without debt relief from the Biden program. With that knowledge, you can start squeezing some extra money into your budget, Kantrowitz said.

Lastly, Kantrowitz recommends setting up an automated payment system so you don’t risk paying late.

“For one, you are less likely to be late and have to deal with the potential for confusion in restarting repayments,” he said. “Call centers are likely to receive a lot of calls” as soon as the repayment starts.

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