Now, in the final months of the federal student loan repayment pause, it’s clear much of that safety net will not materialize.

The Supreme Court on Friday blocked Biden’s debt forgiveness plan, and his administration is still finalizing an overhaul of a program that allows borrowers to pay only a small portion of their discretionary income toward student loans. Several third-party companies contracted by the Department of Education to collect debts have laid off staff, cut call center hours or stopped handling student loans.

The Biden administration now faces an unprecedented task: helping tens of millions of borrowers make payments in a student loan system that’s been dormant for three years.

“Nothing like this has ever been attempted in the history of consumer finance,” said Cody Hounanian, the executive director of the Student Debt Crisis Center, which advocates for debt cancellation. “It is a huge, monumental task that is going to face roadblocks and obstacles along the way.”

Congressional Democrats and proponents of debt cancellation are urging Biden to keep pushing for loan forgiveness before payments resume later this year. Biden said he would announce the next steps his administration will take Friday afternoon.

“I believe that the Court’s decision to strike down our student debt relief plan is wrong,” Biden said in a statement. “But I will stop at nothing to find other ways to deliver relief to hard-working middle-class families.”

Federal student loans payments have been paused and interest has not accrued under a forbearance program that has been extended several times under former President Trump and President Biden. After several false starts, the Biden administration has been legally blocked from extending the payment suspension due to provisions in the deal he signed earlier this month to raise the debt ceiling. Student loan interest will begin accruing on Sept. 1, and loan payments will be due starting in October.

Borrower advocates and administration officials are bracing for a rocky return to repayment.

When Biden announced his student loan debt cancellation plan last year, he said that “by resuming student loan payments at the same time as we provide targeted relief, we’re taking an economically responsible course.”

Under the blocked plan, the Department of Education would have forgiven up to $10,000 in federal student loan debt for people making less than $125,000 a year, or $250,000 for married couples. People who received Pell Grants for low-income students would have been eligible for an additional $10,000. The administration estimated that nearly 20 million people would have qualified to have their debt eliminated by the proposal.

In addition to cancellation, Biden touted changes the administration was making to programs designed to help lower borrowers’ monthly payments or get their loans forgiven.

The biggest proposal is the Department of Education’s overhaul of one of its income-driven repayment programs. Under new proposed regulations released in January, the threshold for what counts as discretionary would be raised from income above 150% of the federal poverty level to 225%. Borrowers with undergraduate debt would owe just 5% of their discretionary income each month, down from 10%.

Individuals making less than $30,600 a year (or $62,400 in a family of four) would owe nothing each month on student loans. Borrowers whose monthly payments don’t cover accrued interest would have it waived. The Congressional Budget Office estimated the plan would cost $230 billion over the next 10 years.

The plan will be finalized sometime this year, Under Secretary of Education James Kvaal told a House panel in May.

Opponents of the plan say that it may entice students to borrow more and encourage colleges to charge more in tuition.

Biden’s student loan policy has focused not on widespread cancellation, but on improving the complex web of safety net programs available to help borrowers, often by undoing policies implemented by Trump’s Education Department.

The Biden administration has approved tens of billions in loan cancellations for people who say they were defrauded by their colleges and made it easier for people who have permanent disabilities to discharge their loans.

The Education Department has also made it easier for people who work in public service or nonprofit work, such as teachers, nurses and social workers, to get their loans canceled through the Public Service Loan Forgiveness program. More than 615,000 public servants were approved for $42 billion in forgiveness through the program, the department announced in May.

But the bulk of federal student loan debt — about $1.7 trillion held by 43 million Americans — won’t be canceled any time soon.

Without loan cancellation or a new income-driven repayment plan, many borrowers will return to a loan system nearly identical to the one that existed before the COVID-19 pandemic.

“I think of the payment pause as a tourniquet,” said Persis Yu, deputy executive director and managing counsel at the Student Borrower Protection Center. “The problem is you can’t just release a tourniquet; you have to actually do the repair. And we haven’t done that.”

A lot has changed for borrowers in three years. Some have moved and haven’t updated their contact information with their loan servicer. Some have new loan servicers. Some were behind on their loans before the repayment pause, while others are making higher or lower incomes that will affect their monthly balances. Millions of borrowers who have graduated since 2020 will be making their first student loan payments later this year.

At the core of the student loan system predicament is the disparity between the size of the challenge and the resources available. The Federal Student Aid office received $800 million less than it requested from the government heading into this year, as Republicans in Congress blocked funding that could be used to implement loan cancellation. That has led to less resources for contracts with loan servicing companies, who have scaled back just as demand is about to explode.

Federal loan servicers such as Navient and Great Lakes have exited the student loan market and transferred their portfolios to other companies. About 44% of student loan holders will have to work with a new servicer when payments resume, according to a June 2023 report by the Consumer Finance Protection Bureau.

The loan repayment system wasn’t designed to handle millions of people returning to payment at the same time, said Scott Buchanan, the executive director of the Student Loan Servicing Alliance, a trade association for organizations that service student loans. He encouraged borrowers to start reaching out to servicers now.

“If we can flatten the curve of demand on the student loan servicing environment by having people reach out in June, July and August … we can mitigate some of the pressures that are going to come to the system,” Buchanan said.