SAN FRANCISCO (KGO) -- After a three year hiatus, millions of Californians are bracing for a dreaded deadline requiring student loan repayments that restarted Sunday.
Some Bay Area borrowers are bracing for a big financial hit.
"So living in San Francisco and the income threshold that they rolled out in the plan doesn't really align with the cost of living here," said Emily Machado, a Redwood City native.
For Machado, it means more worry.
"A lot of adrenaline and just kind of frantic scrolling, trying to understand it all," she said.
The U.S. Supreme Court ruled against the Biden administration plan to forgive loans to more than 40 million Americans - including up to $20,000 of debt for those who received a Pell grant, offered to low-income families.
"I was a Pell grant recipient, so I was eligible potentially to receive up to $20,000 in cancellation as opposed to the standard $10,000 cancellation," Machado said.
Due to income thresholds that were set, which don't take into account where you're living, Machado got nothing. And like many in her position living in the Bay Area, she's struggling to pay other bills with rising inflation.
"It's certainly overwhelming coming out of college to a large pile of money that that needs to be taken care of," she said. "I'm just trying to get a better grasp on what I need to do."
According to the U.S. Department of Education, borrowers should immediately login to their federal student aid website to update any required information and find out who your loan servicer is to explore payment options. These include auto pay or income-driven payment plans.
Economist Bryce Gill says the impact is really dependent on income.
"So for example, you look at the average payment people are going to have to make, it's about $300 your undergraduate degree, and goes up to about $500 on the average per month for a graduate degree," said Gill.
But the Biden administration passed what's called the SAVE plan, which is an income-driven repayment plans. The White House says borrowers who make more than $15 per hour and enroll are expected to save about $1,000 more per year compared to other payment options.
According to the most recent report compiled by the Public Policy Institute of California as of 2020, U.S. borrowers hold about $1.6 trillion in federal student loan debt - and Californians are responsible for more than $142 billion of it.
But Gill says the White House is rolling out some help. He explains one example is what's called the "On-Ramp Transition Period" which protects your credit if you have missed or late payments. Just keep in mind, it's temporary.
"So you're not going to be able to, let's say, 5 years from now, keep missing payments, and have your credit score not be impacted. So this is sort of short term bridge," Gill said.
Short-term help for a long-term check.
"Definitely will need to be a little bit more mindful of spending," Machado said. "Things are really expensive right now."
Interest on federal student loan payments has started accruing since Sept. 1. The Department of Education says you should expect your first loan bill within 21 days of its due date.
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