The road to student loan forgiveness just got longer and more uncertain.

On Thursday, a federal judge in Texas struck down President Joe Biden’s student loan forgiveness program. The plan has drawn a litany of legal challenges and was already temporarily halted as part of a separate lawsuit from six Republican-led states.

As a result of the ruling, the Department of Education stopped accepting applications for debt relief, according to the Federal Student Aid website. The department said it was holding the applications that have already been submitted while the administration appeals the decision. 

As many as 40 million Americans could benefit from the forgiveness initiative, which would forgive up to $20,000 in student loans, and an estimated 45% of borrowers would have their debt wiped out completely.

Demand has been high, with more than 26 million borrowers already providing the information needed to process their applications, according to the Department of Education. It could be a while before there’s any clarity on what will happen to those applications. Here’s what experts recommend doing in the meantime:

Save Your Refund Checks 
Some borrowers have already received refund checks for payments made during the pandemic pause, which they could apply for as part of a little-known provision of the Covid-19 stimulus program. Many did this under the assumption they would have at least $10,000 in student debt forgiven.

“For anyone that has a refund check, I’d suggest you keep that cash available just in case you have to repay it towards your loans,” said Brittany Brinckerhoff, financial adviser at Hilltop Wealth Advisors in North Carolina. 

An estimated 8.8 million people made at least one payment between August 2020 and December 2021, according to a paper by the Federal Reserve. That’s more than 40% of the roughly 20 million borrowers who were required to make payments before the pause.

Richard Cooke, a financial planner at 2Point0 Financial, recommends preparing for the fact that student loan forgiveness might not happen.

“We’re back in wait-and-see mode,” he said. “I expect the Biden administration to continue fighting this, but this might be a wakeup call that we’re not across the finish line yet.”

Prepare Your Budget
With required payments currently scheduled to resume in January, now is a good time to get your finances in order, experts say.

“It’s time to create a budget that has paying student loans in it,” said Jay Zigmont, founder of Childfree Wealth in Mississippi. “That may mean for some that you need to cut out things now.”

The average monthly student loan payment was $300 prior to the payment freeze, which represents a significant portion of many Americans’ monthly bills. With inflation still running hot, pushing up the prices of groceries and rent, preparing for the additional expense is crucial.

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