New graduates walked into a graduation ceremony at Rutgers University in New Jersey in 2018. (Seth Wenig, Associated Press/The Minnesota Star Tribune)

The Supreme Court put an end to the Biden Administration's $400 billion student loan forgiveness proposal. The Administration says it's exploring other options but come October millions of Americans will have to start paying back their student loans after a three-year hiatus. The time to plan and run the numbers is now.

There have been reasonable arguments for and against the debt jubilee. Whether you backed the initiative or not, what shouldn't get lost is the U.S. needs to overhaul its current system that relies on individuals borrowing large sums for college. The college financing system fails too many students. Back in 1955, Milton Friedman, the late Nobel laureate, argued loans aren't a good way to finance higher education. The average expected return to college is high, he said, but variation around the average is wide. Among higher-education experts my sense is that the preferred reforms would include a simple universal income-based repayment system collected automatically through the tax system.

Reform will take years and, in the meantime, borrowers will have to navigate the current complicated repayment system. Borrowers should plug the numbers into the Education Department's Loan Simulator to see what they will owe with each repayment choice. There are four main options.

The standard plan repays the loan in 10 years; the graduated plan starts out low and increases over the 10-year repayment period; an extended plan similar to the graduated plan but over a 25-year period or the same amount split over 25 years; and four income-driven repayment options which calculate the amount owed based on income. The income-driven plans extend the length of the loan.

The income-driven options are a good choice for borrowers with low earnings and tight budgets. These plans set monthly payments between 10% and 20% of discretionary income. The loan is forgiven after 20 to 25 years. The most attractive income-driven option will be the Administration's new Saving on A Valuable Education plan. It should become available soon and borrowers could pay as little as 5% of their discretionary income toward loans. Some borrowers could see their remaining debt forgiven after 10 years. This is probably the best option for many student borrowers.

The choice to extend the life of the loan lowers your monthly tab but adds to the total cost of your college education. That said, there is no prepayment penalty with student loans. If your finances improve several years from now, you can always accelerate payments.
Chris Farrell is senior economics contributor, Marketplace and Minnesota Public Radio.