A lawsuit in the state of Montana could set a legal precedent on climate action.
Do citizens have a right to a healthy environment? In Montana they do. The state constitution reads, “The state and each person shall maintain and improve a clean and healthful environment in Montana for present and future generations.” And a group of young people are using that language to sue the state over its energy policies.
In one of the country’s first climate change lawsuits, a group of 16 young people in Montana alleges that the state has violated their constitutional right to “a clean and healthful environment.” The plaintiffs are arguing that the state government’s ongoing support of the fossil fuel industry in Montana is disproportionately harming them. Depending on the ruling, this could set an example for similar suits across the country.
Montana is a major coal exporter and has the largest coal reserves in the United States. The coal industry has also been a boon for the local economy: Jobs in the coal industry pay about 30 percent more than the median income in the state. The outcome of this case could impact coal’s place in the local economy.
At the same time, preserving the environment makes economic sense for Montana, too. Outdoor recreation is a $7.1 billion dollar industry there. Camping, hiking, fly fishing, and other outdoor activities draw tourists to the state. Critics of the state’s current energy policy point toward green energy like wind turbines as a possible economic alternative to fossil fuels.
This case could also set a precedent, creating a legal roadmap for similar challenges at a crucial time. According to the Intergovernmental Panel on Climate Change, the UN’s goal to limit warming to 1.5 degrees Celsius will be out of reach unless drastic changes are made in the next two years.
One of the plaintiffs, Grace Gibson-Snyder, remembers when she first noticed the impact of climate change in her hometown. It was during one of her summer soccer practices in August, when wildfire smoke blew into the Missoula Valley, where she lives. “The smoke was so dense that the kids on the team with asthma could not play at all,” she said. “And then for the rest of us, it was uncomfortable. It feels like it’s scratching your throat and your lungs.”
Gibson-Snyder, who is 19, says she’s frustrated with the way that young people are discussed as the solution to the climate crisis. She’s also frustrated with what she views as government inaction. “I wish lawmakers understood that this is the only way I see a future where I want to be there. And the youth don’t have a choice, we will be there one way or another.”
The Montana state attorney general’s office has referred to this case as a publicity stunt exploiting well-intentioned kids, and gave The Weeds the following statement when asked for comment, which reads in part:
Following the legislative session, there are no existing laws or policies for the district court to rule on. A show trial on laws that do not exist, as the district court seems intent on holding, would be a colossal waste of taxpayer resources. This same lawsuit has been thrown out of federal court and courts in a dozen other states — and it should be dismissed here in Montana as well.
No matter the outcome, the trial in Helena, Montana likely won’t be the end of this legal battle, according to Amanda Eggert, environmental reporter for Montana Free Press. “I think there’s no question that there will be an appeal to the Montana Supreme Court, no matter which way it goes,” she said. “So I think we’re looking at several years before it’s finally decided.”
Below is an excerpt of my conversation with Eggert, edited for length and clarity. You can listen to The Weeds on Apple Podcasts, Spotify, Stitcher, or wherever you get podcasts.
Jonquilyn Hill
Can you walk us through the timeline of events regarding this case?
Amanda Eggert
So in March of 2020, 16 youth plaintiffs filed the lawsuit in a district court in Montana. Shortly thereafter, the state moved to dismiss the complaint, arguing that the plaintiffs didn’t have standing to bring the lawsuit. And the judge in this case, Kathy Seeley, denied the motion to dismiss and essentially set the lawsuit on a path for trial.
But something interesting that happened recently is that our legislature convened in January for a 90-day session, and they passed a couple of bills that have pretty strong implications for the lawsuit.
Jonquilyn Hill
How so?
Amanda Eggert
Well, central to plaintiffs’ claims was the state’s energy policy, and that was a legislatively established piece of law that’s about 30 years old, establishing a broad energy vision for the state. And the legislature actually repealed the entirety of the policy this spring. So shortly after that was passed by the legislature and signed by the governor, the state moved to dismiss the lawsuit arguing that since this piece of law is no longer on the books, the lawsuit has no grounds to proceed. And they asked the judge to dismiss the case based on the repeal of that policy. And she did decide to narrow the scope of the case based on the repeal of that policy. But there’s another law at play here too, and that is House Bill 971, and that explicitly prohibits the state from considering greenhouse gas emissions or climate impacts in its environmental review process.
So Judge Seeley actually referenced the passage of House Bill 971 in her order that she issued on May 23, 2023, and she said that the courts may be unable to direct the state to consider greenhouse gas impacts, but it can certainly strike down a statute preventing them from doing something like that. And she’s allowed the case to proceed.
Jonquilyn Hill
Were people surprised that Judge Seeley took this case on in the first place?
Amanda Eggert
Yeah, I think it is pretty surprising. It still surprises me to this day. It’ll be the first time that a climate change case of this nature goes to trial. There will be a lot of people watching it.
Judges are often reluctant to rule on constitutional claims such as a quote-unquote “clean and healthful environment” because there’s some subjectivity to that. Oftentimes, they would prefer to rule on statute alone. You know, what legislators pass in the capitol every two years in Montana, because that can be a little bit more fleshed-out, versus a broad, overarching environmental protection for current and future generations. So, I was surprised, and it’s really going to be interesting to see how it all plays out.
Jonquilyn Hill
Do we know why the judge denied the state’s motion to dismiss?
Amanda Eggert
I think she recognized that the plaintiffs have standing and that standing is a legal concept, essentially establishing that the plaintiffs have demonstrable harms and that there are remedial actions that can be taken to correct those harms.
And she also recognized that the state’s energy policies do have a direct bearing on those harms.
Jonquilyn Hill
Often, when we talk about climate change, we talk about it on a more global scale, but this seems really individual and really small scale, these young people are saying this is harming me in this particular way.
Amanda Eggert
I’ve spoken with one of the lead attorneys for the plaintiffs, and I know that they took great care to establish a whole record. Their initial complaint is over 100 pages, which is huge by legal standards.
But in that they’re trying to establish very specific individual harms. So there are plaintiffs that talk about being evacuated due to forest fires or plaintiffs who talk about grieving the loss of glaciers in Glacier National Park. There are plaintiffs who talk about concerns related to wildlife.
And in addition to establishing those very specific harms, the plaintiffs also went to great lengths to demonstrate that climate change is happening, that climate change is happening in Montana, and that the state has been extremely permissive in its permitting of fossil fuel extraction, which is the largest source of greenhouse gas emissions in Montana.
Jonquilyn Hill
What exactly is the state arguing against the plaintiffs?
Amanda Eggert
The state is making all kinds of claims. A lot of them are central to whether or not the plaintiffs have standing. That’s kind of a legal test, establishing that there’s a harm that’s occurring, that there’s some sort of judicial remedy that could correct those harms, and that the actors involved in this situation, the state, are implicated in furthering those harms.
So much of the state’s claims thus far deal with whether or not climate change is occurring, whether the plaintiffs have experienced the harms that they allege in their filings, and whether there is any legal foundation to change state energy permitting practices.
Jonquilyn Hill
Underlying this legal battle is another tension in Montana, between preserving the outdoor economy and the state’s role as an energy exporter. Can you talk about the impact of climate change in Montana? How is the land itself changing and how is it impacting citizens and the state’s economy?
Amanda Eggert
I think one of the clearest assessments we have of climate change impacts in Montana specifically came out in 2017. It’s called the Montana Climate Assessment.
Our governor at the time, a Democrat, Steve Bullock, asked the state to put together this assessment, and it found that between 1950 and 2015, the state had warmed on an average between two and three degrees. And then it goes into more specific impacts — we don’t have as much snowpack as we used to. And that’s a big deal for our rivers.
Montana is a headwater state located along the continental divide. Some of our rivers go all the way down to the Columbia, others go all the way down to the Mississippi. But with the loss of snowpack, we have less snow and therefore water to sustain our rivers into the late summer and fall. That’s a big deal for our outdoor economy. Fly fishing is a great big deal in this state. It’s also a big deal for agriculture, — lots of farmers are dependent on rivers for irrigation of their crops.
Loss of snowpack is also a big deal for our ski industry and our outdoor recreation economy generally, which is about $7.1 billion. And then there are other impacts, like more extreme wildfires and a longer wildfire season, which has health impacts because there’s more smoke that everyone is sucking in through much of the summer and fall.
Jonquilyn Hill
Montana has one of the largest outdoor recreation economies in the country. And I think that’s part of what makes Montana an interesting stage for this lawsuit, because it also has the largest coal reserves in the country. Can you talk about those opposite forces of industry?
Amanda Eggert
Yeah. And that tension is very top of mind for me, having just come out of the legislative session where lawmakers passed some significant reforms to coal permitting and litigation challenging coal permits.
We have a Republican in the governor’s seat. We have a supermajority in the legislature of Republicans and they are a little more old school in terms of their support for what I would call a quote-unquote “traditional industry” such as logging and mining and agriculture. And that definitely is reflected in the laws that are passed at the Capitol.
Jonquilyn Hill
I want to talk about the potential impact on Montana if the judge rules in the plaintiffs’ favor. What could this potentially change for Montana?
Amanda Eggert
That’s a really good question. And the way it’s been explained to me by one of the attorneys working for the plaintiffs is that it’s kind of like marriage equality, where initially they’re just asking the courts to recognize that the current law is out of accordance with the Constitution.
And so it would very broadly establish that these harms are occurring, that they are not supposed to be occurring according to Montana’s constitution, and to establish this overarching principle that we’re going to kind of change the way that we do things.
Generally speaking, that would look like asking the state to bring its energy permitting practices in alignment with the constitution and the protections for a clean and healthful environment.
What that would look like in practice would be established through many iterations of policy, I would think.
Jonquilyn Hill
Can you talk a bit about the potential jobs and economic impact if these changes are made?
Amanda Eggert
One of the practices that’s central to plaintiffs’ claims involves coal mining and coal combustion. And coal mining jobs are high-paying jobs relative to the median income in Montana. I think they’re about 30 percent higher than Montana’s median income. In addition to coal mining and power plants, there are communities that are entirely dependent upon coal. They’ve been described as a one-horse town kind of a situation where if you don’t have the power plant and you don’t have the mine, then all of a sudden you have tumbling property values, you don’t have a tax base to support your school at the same level, maybe some of your local retailers go under, that kind of a thing.
Jonquilyn Hill
Is it realistic to think that if the plaintiffs win in this case, Montana will make the switch to green energy?
Amanda Eggert
A lot of people are really curious about that. And I think there are a couple things at play. One is that even clean energy boosters will recognize that there are not as many wind energy jobs as there are for mining coal and burning it.
And the other thing that they recognize is that they don’t tend to pay as well as the coal jobs. So that’s one component of it. You would potentially be looking at fewer jobs, maybe, though that’s probably debatable, that would pay a little less.
The other piece of this conversation that I think is relevant is there’s this kind of cultural divide in Montana regarding fossil fuel jobs and clean energy jobs. So I think it might be a little bit difficult for someone working at a coal-fired power plant or a boilermaker to sign on to maintain wind turbines, for example.
Jonquilyn Hill
As this trial starts, what will you be watching for?
Amanda Eggert
So the state is making the argument that climate change is not a result of human activity, that it’s representative of natural variability. So I will be very interested to see how it makes those claims. They have an expert who will be testifying to that effect.
And I’ll also be interested in getting this both broad and deep look at the permitting process for energy projects. I’m kind of an energy nerd these days, and I’ll really be interested to see how the plaintiffs lay out the specific policies that have favored the fossil fuel industry.
Jonquilyn Hill
Do we have a sense of the timeline? Do we know about how long this trial will take and when we can expect a ruling from the judge?
Amanda Eggert
The trial is scheduled to take place over a two-week period, so it’ll wrap up by the end of June, and oh, man, I don’t have a crystal ball for when a ruling will come. I have talked to people who think that a ruling will come quickly.
Evidently, one of the lead attorneys for the plaintiffs is confident that Judge Seeley will rule in the plaintiffs’ favor.
I think there’s no question that there will be an appeal to the Montana Supreme Court, no matter which way it goes. So I think we’re looking at several years before it’s finally decided.
Is there a right to sleep outside?
Five years ago, a federal court issued a crucial ruling. People experiencing homelessness, the Ninth Circuit Court of Appeals said, can’t be punished for sleeping outside on public property if there are no adequate alternatives available.
The 2018 decision in Martin v. Boise did not create the homelessness crisis, which researchers attribute primarily to the lack of affordable housing. The number of people experiencing unsheltered homelessness — meaning those sleeping on the streets, in parks, in abandoned buildings or train stations, or anywhere not meant for humans to live — was rising before the decision.
But as the number of unsheltered homeless people continued to grow over the past half-decade, the Martin decision has become a pivotal factor in shaping how cities respond to the very visible problem of tent encampments, particularly on the West Coast. While the case never gained huge name recognition, it undergirds the policy and politics of homelessness in 2023. So much of the fight about how to address homelessness today is, at this point, a fight about Martin.
The case dates back to 2009, when Robert Martin and a group of fellow homeless residents in Boise, Idaho, sued, arguing that police citations they received for breaking local camping bans violated their constitutional rights. In 2018, the Ninth Circuit agreed that prosecuting people for sleeping or camping on public property when they have no home or shelter to go to violated the Eighth Amendment’s prohibition on cruel and unusual punishment.
“The government cannot criminalize indigent, homeless people for sleeping outdoors, on public property, on the false premise they had a choice in the matter,” the court declared.
States, cities, and counties urged the US Supreme Court to take up the case, arguing the Ninth Circuit had created “a de facto” right to live on sidewalks and in parks that would “cripple” local leaders’ ability to safely govern their communities. But in 2019, the court declined, baffling some experts, though others suspect it’s because there were no conflicting circuit decisions at the time. Since then, Martin has shaped cities’ response — or lack thereof — to the growing challenge of homeless tent encampments.
While the decision only formally applies in areas under the Ninth Circuit’s jurisdiction, the ruling has reverberated nationally, as local governments consider how to address unsheltered homelessness in ways that could avoid costly constitutional legal battles. There have already been dozens of court cases citing Martin, including in the Fourth Circuit in Virginia, and federal lower courts in Ohio, Missouri, Florida, Texas, New York, and Hawaii.
For now, though, Martin’s impact can be seen most clearly out West. Just before Christmas 2022, for example, a district judge cited Martin when she ruled that San Francisco can no longer enforce encampment sweeps — meaning clear out homeless individuals and their property from an outdoor area — since the city lacks enough shelter beds for those experiencing homelessness to move into. San Francisco appealed the decision, arguing it’s “unnecessarily broad and has put the City in an impossible situation.”
In Phoenix, Arizona, residents and business owners filed a lawsuit last summer against the city for allowing a downtown homeless encampment to grow with nearly 1,000 people, but a federal judge — echoing Martin — barred Phoenix in December from conducting sweeps if there are more homeless people than shelter beds available. A competing decision issued in March by a state judge ordered Phoenix officials to clean up the “public nuisance” at the encampment by July 10, arguing the city has “erroneously” applied Martin to date.
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Caitlin O’Hara/Washington Post via Getty Images
In Portland, Oregon, meanwhile, officials have scrambled to revise their local camping ordinance to be a “daytime” camping ban from 8 am to 8 pm instead, in recognition that any total camping ban is likely illegal under Martin.
Supporters of a more “get tough” approach to encampments say the social and political costs of allowing tent cities to proliferate are too high, and that waiting for cities to build enough new housing before acting is untenable, both morally and politically. Some think officials are getting complacent in relying on Martin as an excuse to maintain the status quo.
Advocates for those experiencing homelessness say politicians are squandering an important opportunity by fighting for the right to conduct encampment sweeps — which can be both cruel and counterproductive to the larger goal of ending homelessness. Instead of looking for legal loopholes to Martin like daytime camping bans and sanctioned encampment sites, advocates say leaders should be investing more in solutions like affordable housing and shelter options that afford people more privacy.
“Our end goal is not to create a right for people to sleep on the streets. That’s the limited remedy we’ve been given under our Constitution,” said Eric Tars, the legal director for the National Homelessness Law Center. “They’re missing the point of Martin if they’re just trying to continue a criminalization approach in a more constitutional way.”
Cities are scrambling to comply with — and find loopholes in — Martin v. Boise
Unsheltered homelessness has risen sharply over the last seven years, and at a faster rate than homelessness overall. Unsheltered homeless people now account for 40 percent of all homeless people in the country, up from 31 percent in 2015.
Political pressure has mounted to respond to this growing problem of people sleeping in alleys, parks, and train stations. While it’s not clear this would be legal under Martin, a number of cities have turned to the idea of so-called sanctioned encampments, or legalized campsites. These are effectively designated areas where unhoused individuals can live outside, and some come with varying degrees of public services, like bathrooms, power outlets, medical care, and on-site case management.
In Portland, Oregon, lawmakers voted in November to create several large sanctioned campsites for homeless individuals, and ban the more than 700 other encampments spread across the city. Austin, Texas, has operated one sanctioned encampment of so-called “tiny homes” since 2019, on a seven-acre plot of asphalt near the airport. Denver, Colorado, is also moving to make its so-called “managed campsites” from the pandemic a permanent homelessness response tool.
The trade-off for legalized campsites, however, is that sleeping outside anywhere else in a city would then be illegal. This helps alleviate leaders’ political problem of having tents pitched all over a city, but activists worry it’s just a way to steer the sight of homelessness out of public view, and criminalize people who refuse to go. Some cities are considering sanctioned encampments with a six-month residency limit, even if there’s no permanent affordable housing option for those experiencing homelessness to go to after that point.
Some advocates have taken a firm stance against the idea; they see sanctioned encampments as a means to segregate and criminalize unhoused people and effectively kick the can down the road by not finding them permanent housing.
They’re not wrong that sanctioned encampments can require a great deal of money, staff time, and effort. In 2018, the United States Interagency Council on Homelessness warned that “creating these environments may make it look and feel like the community is taking action to end homelessness on the surface — but, by themselves, they have little impact on reducing homelessness.”
For these reasons, some cities — like Houston — have rejected the idea. “We can do better as a society. We shouldn’t tolerate it and say that’s okay,” Marc Eichenbaum, the special assistant to Houston’s mayor on homeless initiatives, told NPR.
But other cities with fewer available housing options say sanctioned encampments represent a decent interim solution, and maybe even better for unhoused residents compared to scattered campsites if cities can more effectively target social services to those corralled together.
Legalized campsites can also have a lower barrier to entry than many existing shelters, so supporters are framing them as a harm-reduction approach to homelessness. Groups like the National Homelessness Law Center, which used to firmly oppose sanctioned encampments, have recently softened their stance to say they should be considered on a case-by-case basis.
“The only time that we would see a role for that approach is if you had an exit plan,” said Tars, who pointed to some models in Seattle and Gainesville, Florida, that he thought were more positive. “Otherwise you are just creating a permanent shanty town.”
Meanwhile, Republican-governed states are exploring more punitive models. In at least half a dozen states, lawmakers have pushed sanctioned encampment bills based on templates from the Cicero Institute, an Austin-based conservative think tank. The bills propose to penalize cities that permit tent encampments, to put time limits on sanctioned encampment sites, and to divert funding from permanent supportive housing into things like mandatory drug treatment.
In 2022, Tennessee became the first state to pass a bill that would make camping on local public land a felony. Missouri’s version will allow the state’s attorney general to sue local governments that don’t enforce encampment bans. Activists say Cicero’s aggressive opposition to housing-first will lead invariably to more homeless people in jail.
Looming ultimately above all these various sanctioned encampment models is the Martin decision, which says a city-wide camping ban would be unconstitutional if the city lacks sufficient shelter options. Leaders recognize they probably can’t ban camping everywhere under Martin, but they want to see if they can ban it in most places instead. Yet whether any bans could exist if a city lacks enough shelter beds remains an open Eighth Amendment question.
Tars, of the National Homelessness Law Center, thinks the answer is no. “Martin is very clear when it’s talking about ‘adequate’ [housing] alternatives it’s talking about indoor shelter beds, and legalized encampments are not shelter beds,” he said, pointing to a 2021 federal court decision that found a sanctioned encampment site in Chico, California, was inadequate “shelter” under Martin. A federal judge described Chico’s encampment as “open space with what amounts to a large umbrella for some shade” that “affords no real cover or protection to anyone.”
Tars acknowledged, though, there’s a “legal gray area” in the Martin decision, as one footnote suggests cities could create some “time/manner/place” restrictions for camping.
Earlier this year, when a Maricopa County Superior Court judge ordered Phoenix officials to clear its notoriously large downtown encampment, he urged the city to consider “the creation of controlled, outdoor camping spaces on vacant City property” if there were not enough shelter beds to move people into.
As in Houston, Phoenix officials have rejected the sanctioned encampment approach to date, saying resources should be invested into housing solutions with air conditioning: Over 80 percent of Maricopa County’s 425 heat-related deaths in 2022 occurred outside. Local officials estimate unsheltered homeless people are at “200 to 300 times higher risk” of heat-related deaths than the rest of the population.
Still, even if Phoenix leaders embraced sanctioned encampments, it’s not clear the idea would hold up under Martin. Resolving some of these questions will realistically require the Supreme Court, but that’s unlikely to happen until there’s competing circuit court decisions to pressure it to take the issue up.
Homelessness policy is at a crossroads
There are court rulings, and then there’s enforcement of those rulings. Homeless advocates say it seems as though too many cities are failing to comply with rulings that bar unconstitutional sweeps.
For example, lawyers say little has changed in San Francisco since a federal judge ruled against sweeps six months ago, and that homeless residents continue to be displaced under the guise of street cleaning.
“What we’ve seen has been a really aggressive media campaign led by the city to suggest we are pro-open-air drug markets and anti-accessibility for sidewalks,” said Zal Shroff, an attorney with Lawyer’s Committee For Civil Rights representing the homeless plaintiffs.
“You’re allowed to clear genuine public safety hazards, but when you do that and throw their laptops and cellphones into dumpsters, that’s not a cleaning — that’s a seizure of someone’s belongings without due process,” he added. In late May, Shroff’s team filed a court motion, calling for increased monitoring.
Jen Kwart, a spokesperson for San Francisco’s city attorney, told Vox they’re “complying with the preliminary injunction while simultaneously expending hundreds of millions of dollars annually to provide shelter and services to unhoused people.”
In Phoenix, while the city is working to clear out its large homeless encampment by July 10, per the Maricopa County Superior Court, the ACLU has been arguing the city’s clearings have violated the rights of unhoused people.
“Even if you’re unsheltered, you have due process rights to your belongings under the Fourth and 14th Amendments,” said Benjamin Rundall, an attorney with ACLU of Arizona. “You can’t violate someone’s constitutional rights in order to vindicate someone’s private property rights.”
It’s not clear at all where the estimated 700 unhoused people living in the downtown Phoenix encampment are supposed to go. There are not enough available shelter beds in the city; the four largest ones were at 97 percent capacity as of April.
A spokesperson for Phoenix’s Mayor Kate Gallego did not return requests for comment, but an April city press release said they were exploring hotel options and expected 800 new shelter beds to come online before the end of 2024.
Some conservative legal advocates see the Maricopa County Superior Court ruling as offering a blueprint for other cities and states to clear out their tent encampments. “For too long, liberal leaders have used the Martin ruling as an excuse to allow rampant crime and homelessness to take over neighborhoods,” argued Austin Vanderheyden, a liaison at the Goldwater Institute, in the Orange County Register. “But no longer.”
“Our lawsuit was never about solving homelessness,” wrote Ilan Wurman, who represented the Phoenix business and property owners. “It was about solving the humanitarian crisis that these encampments create.”
Meanwhile, as pandemic eviction aid dries up, homeless advocates are bracing for more people to lose their housing in the coming months. Washington, DC, recently reported an 11.6 percent increase in homelessness from 2022. While the nation has been increasing its shelter bed capacity over the last few years, fewer people are choosing to stay in them. Many have decided sleeping outdoors is preferable to the rules and conditions of congregate shelters.
Figuring out where cities go next will be shaped in no small part by how leaders and courts land on interpreting Martin.
“It really feels like we’re at a tipping point,” said Tars. “Things could either get much better or much worse.”
Get ready now to resume (or start) paying back your student loans.
More than three years after student loan repayments were paused due to the Covid-19 pandemic, borrowers will soon receive their first bill since early 2020. With the Supreme Court likely to rule against the Biden administration’s student loan forgiveness plan — which would cancel up to $20,000 in debt — and the debt ceiling bill preventing any future pauses on payments and interest without congressional approval, those with student loan debt will see no further relief. Regardless of the Supreme Court’s decision on loan forgiveness, payments will resume later this summer. Be prepared for when they do and to enroll in income-driven plans so you’re not faced with an unruly initial payment.
Payments remain paused until 60 days after June 30, 2023. Borrowers should expect payments to resume in early September, though the exact date remains unclear. The US Department of Education will inform borrowers at least 21 days before payments restart. This notice will also include the payment amount and due date.
Student loan servicers are anticipating customer service issues at the onset of resumed payments, so getting your ducks in a row now may help prevent frustration come fall. Advance planning will also help you determine if your loan servicer has changed, get ahead of tax preparation, and, most importantly, set a budget. Not paying your monthly bill on time will affect your credit score, which can impact your ability to purchase a home or a car. According to recent research from VantageScore, a credit score model development company, 34 to 76 percent of borrowers may miss their next required federal student loan payment, resulting in a decline in their credit score. Those resuming payments will only see a 1 to 8 point increase in their credit score, while those unlikely to pay could see their credit scores decrease between 49 and 82 points, within a month of resumed repayments.
“Always make a plan today that is based upon what you know today,” says Scott Buchanan, the executive director of the Student Loan Servicing Alliance, a nonprofit that focuses on student loan servicing issues. “Not hypotheticals that might happen, what the government may or may not do in the future. If that changes in the future, and there’s new information that comes along, you can adjust your plan.”
Whether you just graduated and haven’t begun paying back your loans or will soon resume repayment, here’s what you should keep in mind to prepare.
How do I pay back my student loans?
You’ll begin, or continue, paying your loans through your student loan servicer’s website — the company that handles the billing for the loan. This is most likely the same servicer you were using to pay your loans prior to the shutdown. However, several servicers — Navient, the Pennsylvania Higher Education Assistance Agency, Granite State Management and Resources, and Great Lakes Higher Education Corp. — ended their contracts with the Education Department or were acquired by another servicer, meaning you will have a different company and online portal for your loans if you previously used those servicers. Whether you’re just starting to pay off your loan or had a switch from an old servicer, you’ll be notified by the servicer. Some borrowers who are being transferred to a new servicer will have to create new online accounts, Buchanan says, and others won’t have to take any action with their new servicer — just pay attention to emails and letters from your servicer and follow instructions.
To find out your servicer, log in to your Federal Student Aid account and find the “My Loan Servicers” section or call the Federal Student Aid Information Center at 1-800-433-3243. The current list of student loan servicers includes Edfinancial, Mohela, Aidvantage, Nelnet, OSLA, ECSI, and Default Resolution Group.
Once you’ve determined your loan servicer, log in to your account and make sure your contact information is up to date — your email, phone number, and address — especially if you’re anticipating a transfer to a new servicer. Even if you accidentally make a payment through your old servicer, it will automatically be forwarded to your new one, Buchanan says.
Review your banking information. If you enrolled in auto-debit prior to March 2020, you’ll have to opt in to auto-debit again. Anyone who signed up for auto-pay or continued making payments throughout the shutdown doesn’t have to make any updates to their billing info. Buchanan advises calling your servicer as soon as possible if you have any questions while setting up an account or choosing a payment plan. “Given the budgetary constraints that the federal government and the Department of Education are under and, frankly, the sheer volume of people in this unprecedented return to repayment,” Buchanan says, “if everyone calls us on September 1, we’re going to have a lot of heavy call times and call hold times, and payment and processing could be delayed.”
How much do I owe?
Since you accrued no interest since the pause began, the amount you owe should remain the same. (That is, unless you made payments during the pause.) When you log in to your account on your loan servicer’s website, you can see how much you owe and how much you will be expected to repay each month. “Nothing practically has changed in terms of monthly payment amount for borrowers in general,” Buchanan says.
The Education Department has an online loan simulator that helps you calculate your monthly payments and provide options for lowering that amount. You can log in to your Federal Student Aid account and the simulator will show you different breakdowns under various repayment plans based on what you owe. You can compare different plans side by side to see the differences in monthly payments and interest accrued overall.
What if I can’t afford the monthly payment?
Unless you choose otherwise, all borrowers are placed on a standard repayment plan, which means you pay a fixed amount of at least $50 every month for up to 10 years. There are other payment plans if the standard monthly payment is too high for you. Through your loan servicer, you can opt for a graduated repayment plan, which starts with lower payments that increase every two years, or an extended repayment plan where you can pay off your loan in 25 years if you have more than $30,000 in loans. Keep in mind you’ll end up paying more in the long run with these options.
You can also choose an income-driven plan where your monthly payments will be 10 to 15 percent of your discretionary income (defined as the difference between your annual income and 150 percent of the poverty guideline for your family size and state of residence). Repayments are recalculated each year based on your income and family size. If, after 20 years, you haven’t paid off the loan for your undergraduate schooling, the outstanding balance will be forgiven. You can apply for an income-driven plan online. If you were already enrolled in an income-driven plan, you’ll still be enrolled in the same plan but you’ll need to recertify your current plan by providing updated information about your income and family size in about six months, Buchanan says. However, if your family size has grown or your income has decreased dramatically, it’s worth recertifying your plan now in order to get a smaller monthly payment.
Start putting aside money now
Once you’ve determined what your monthly student loan payment will be, start putting that money aside now, before payments resume, Buchanan says. “Pretend that the resumption has already occurred,” he says. If your bill is $200 a month, put that $200 aside mentally or in a savings account and see how this impacts the rest of your monthly budget. Should you struggle to pay your other bills in this hypothetical situation, consider looking into an income-driven plan.
Don’t throw away important tax information
When you pay $600 or more in student loan interest, your loan servicer will send you an IRS Form 1098-E by the end of January. If you paid over $600 in interest for the 2023 tax year, you’ll get that form in January or February 2024. Save this for your tax preparation purposes.
Be aware of scammers
Any unsolicited call or email promising loan forgiveness or to lower your monthly payment for a fee is a scam. Don’t give money to anyone other than your student loan servicer. If you’re unsure whether a call is coming from your servicer, hang up and call the customer service number included on your bill. Any customer service provided by your loan servicer, whether it’s enrolling you in an income-based plan or answering questions, is available for free.
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