The clock is ticking on the return of student loan payments, and many Americans are preparing for a budget hit they’ll struggle to afford.

The legislation to raise the debt ceiling, which was signed by President Joe Biden Saturday, included a provision that ends the three-year pause on required student loan payments. Now, those bills are set to resume at the end of August.

That will add an expense for millions of people already grappling with stretched household budgets. More than 15% of borrowers were behind on payments before the pandemic pause, a figure that’s expected to further increase if bills resume without any debt relief.

Even if Biden’s plan to forgive up to $20,000 per borrower survives the Supreme Court, no more than 45% of borrowers will have their debt wiped out completely, leaving the rest with a sudden increase in monthly bills.

For many, there just isn’t enough money to go around, especially considering the average monthly payment before the pandemic was almost $400 per borrower. If something has to fall through the cracks, how do you decide which bills take priority?

We asked experts what to do if you’re facing this kind of crunch.

Weigh The Impacts
Kyle Simmons, founder of Simmons Investment Management in Colorado, recommends focusing first on your housing, transportation, food and utilities. After that, you can prioritize your credit cards, medical debt and student loans.

You should try to pay down the debt with the highest interest rate, while still making minimum payments on the rest, he said. Credit cards are often the most problematic, with rates above 20%.

Julia Colantuono, owner of One Financial Design in Massachusetts, agrees that basic expenses like rent and transportation need to come first. Afterwards, it may be wise to prioritize student loans over credit card debt. That’s because defaulting on federal student loans can lead to consequences like having tax refunds withheld, jeopardizing your social security retirement benefits and the risk of being sued by a collections officer.

“Defaulting on a credit card typically doesn’t happen until after six months of missing the minimum payment, so at the very least, try to make the minimum payment,” she said. “If you can’t make the minimum payments for both, then I would suggest prioritizing the federal student loans first.”

Negotiate With Lenders
With rent, mortgage payments, car loans, student loans and credit card debt there could be room for negotiation, depending on your relationship with your lender and your credit score.

“It's often in everyone's best interest if there’s not a default,” said Noah Damsky, principal at Marina Wealth Advisors in Los Angeles.

Damsky recommends talking with your landlord about paying less rent each month or creating a delayed payment schedule. Landlords are often incentivized to work with you — that way, they don’t have to deal with the prospect of hiring an attorney to evict or sue for unpaid balances.

The same is true for credit card companies, which sometimes will give you a lower interest rate, said Sarah Behr, financial adviser at Simplify Financial Planning in San Francisco. You just have to be willing to spend time on the phone, waiting on hold and pleading your case.

Reduced Payments
There are several income-driven repayment plan options available for people with federal student loans. Currently, those who qualify can expect to pay no more than 10% of their discretionary income, which is any income you make over 150% of the poverty line based on your family size and state of residence. You can find out if you’re eligible by contacting your loan servicer.

If your discretionary income is low enough, you’ll qualify for $0 monthly payments — and may be eligible for some forgiveness after making consistent payments over a certain period. You’ll just need to recertify your income every year to determine how much you owe.

As part of the one-time debt forgiveness plan, the Biden administration also introduced changes to the IDR program, which would increase the discretionary income bar to 225% of the federal poverty line, meaning more people would qualify for $0 in monthly payments. But that hasn’t gone into effect yet.

Americans who work for the government, public education, the military and other industries can also apply for a Public Service Loan Forgiveness plan, in which the remainder of your loan balance can be forgiven after 120 qualifying payments. The PSLF programs determine monthly payments based on income. 

This article was provided by Bloomberg News.