• The more than three-year-long pause on federal student loan payments is slated to finally conclude within months.
• Consumer advocates and borrowers are worried about the transition, which will unfold while student loan forgiveness is still tied up at the Supreme Court.

Richelle Brooks' budget is already tight. She doesn't know what she's going to do when federal student loan payments resume in the fall.

The single mother of two has seen all her expenses rise over the last few years amid high inflation. "I go grocery shopping and spend $300 or $400 for food that'll last two weeks in my house," said Brooks, 35. Her mother recently moved in with her because she doesn't earn enough as an office manager to afford the rents in Los Angeles, where they live.

Although Brooks earns around $100,000 as a high school principal, her student loan balance is at nearly $240,000. She's already calculated what her new payment will be.

"With an extra $600 a month, where is that going to come from?" Brooks said.

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Millions of other people are likely asking a similar question.

The more than three-year-long pause on federal student loan payments is slated to finally conclude within months. The Biden administration is preparing borrowers for their payments to resume by September, even while its loan forgiveness program is halted as the Supreme Court debates its validity. The debt ceiling deal passed by Congress also includes a provision officially terminating the pandemic-era relief policy and making it harder for the U.S. Department of Education to extend it.

"The emergency period is over, and we're preparing our borrowers to restart," Education Secretary Miguel Cardona said at a Senate hearing last month.

Average borrower saved $15,000 due to payment pause

Former President Donald Trump first announced the stay on federal student loan bills and the accrual of interest in March 2020, when the coronavirus pandemic hit the U.S. and crippled the economy. The pause has since been extended eight times.

Nearly all people eligible for the relief have taken advantage of it, with less than 1% of qualifying borrowers continuing to make payments on their education debt, according to an analysis by higher education expert Mark Kantrowitz.

As a result of the policy, the average borrower likely saved around $15,000 in student loan payments, Kantrowitz said. The typical monthly bill is just under $350 a month.

'There will be some initial chaos'

Because there's no lending precedent for borrowers getting such a long reprieve from their bills, there is little evidence to inform what will happen when the payments resume.

But Kantrowitz expects most borrowers to adjust pretty quickly.

"There will be some initial chaos, but it should settle down within a few months," he said.

However, Education Department Undersecretary James Kvaal warned earlier this year that if the administration is unable to deliver on President Joe Biden's plan to forgive up to $20,000 in student debt for borrowers, delinquency and default rates could skyrocket.

During previous natural disasters, borrowers were offered shorter forbearances, and many fell behind when their payments resumed, Kvaal said in a court filing.

″[T]he one-time student loan debt relief program was intended to avoid" that problem, he added.

'Borrowers are not ready to resume payments'

House Speaker Kevin McCarthy applauded the provision in the debt ceiling agreement that officially ends the stay on bills by September, saying the Biden administration "can [no] longer use Covid as an excuse to pause student loan repayments."

"It also requires borrowers to be responsible for paying off their student loans once again," McCarthy wrote on Twitter.

Yet consumer advocates say the troubles for student loan borrowers are far from over.

"Borrowers are not ready to resume payments," said Persis Yu, deputy executive director at the Student Borrower Protection Center. "Even if the risk from the virus has diminished, the financial fallout has not."

Before the public health crisis, when the U.S. economy was enjoying one of its healthiest periods in history, there were still problems plaguing the federal student loan system and some experts compared it to the 2008 mortgage crisis

Only about half of borrowers were in repayment in 2019, according to an estimate by Kantrowitz. Around 25% — or more than 10 million people — were in delinquency or default, and the rest had applied for temporary relief measures for struggling borrowers, including deferments or forbearances.

"I think they may be in a worse position," Yu said, of those people. "Which is why President Biden's debt relief program is so critical."

The Biden administration announced a new program last year that will give defaulted borrowers the chance to get into current standing. However, "the administration has barely begun doing outreach" on the program, Yu said.

The Education Department did not immediately respond to a request for comment.

Yu is also worried about the recent turnover and layoffs among student loan servicers, which faced criticism and complaints from advocates, regulators and borrowers long before Covid.

During the payment pause, three companies that managed the loans — Navient, the Pennsylvania Higher Education Assistance Agency (also known as FedLoan) and Granite State — all said they'd be ending their relationship with the government. As a result, around 16 million borrowers will have a different company to deal with by the time payments resume, or not long after.

"It is critical for folks to understand that the student loan system is not prepared to return to repayment," Yu said. "We are relying on brand new servicers and expecting them to help millions of borrowers through a byzantine system all at once."

Some borrowers face hard financial choices

Half of Paul Berlet's monthly income goes to his rent.

The sixth-grade English teacher earns a little under $50,000 a year, and pays $1,200 a month for his one-bedroom apartment in Wilmington, Delaware.

To be able to afford his student loan payment in September, Berlet plans to cut back on how much food he buys. Although he'll technically be able to come up with the extra $250 a month by doing so, he doesn't believe he should have to make these kinds of decisions.

"There's no reason somebody should need to take out loans to be a teacher," said Berlet, 23. "But to be able to serve my own community, I needed to put myself in debt."

Starting in the fall, he expects to return to the diet he had eaten as a broke college student.

"When I go grocery shopping now, I'm able to buy fresh ingredients, vegetables, a piece of salmon if I want it," he said. "But that will go away, and I'll be back to [instant rice] and beans."

Brooks also doesn't believe she should have to be hundreds of thousands of dollars in debt for her education.

Her parents didn't attend college, she said. Her mother was a waitress for much of her life; her father wasn't around. To finance her degrees, she turned to government loans.

"By attaining an education, I was working to better myself and get out of poverty," Brooks said.

Her student debt has made that mission difficult. And she worries the consequences will continue.

Her daughter, Mariah, will start college herself in three years. During the pause on student loan payments, Brooks has been able to put aside $150 a month for Mariah's education.

But starting in September, she won't be able to do that anymore.