Sep 26, 2023 - News

Student loan repayments starting up for millions of Californians

Illustration of an envelope, shaped like a graduation cap, stamped with a "payment due" notice

Illustration: Annelise Capossela/Axios

Many San Diegans with student loan debt will face a new monthly bill next week, when payments resume after a three-year pause.

Driving the news: Student loan interests started back up this month, while payments are set to be due starting Oct. 1.

Why it matters: For millions of individuals, the resumption of student loan payments will result in real and often painful spending cuts. Those cuts could also translate to a slowdown for the economy overall, Axios' Emily Peck writes.

  • Reality check: Experts say the end to the reprieve won't reduce consumer spending enough to impact the larger economy as some feared.

Zoom in: Nearly four million Californians have federal student loan debt that totals more than $149 billion, according to Federal Student Aid data.

  • That breaks down to an average of about $37,500 per borrower.
  • Yes, but: The majority of California borrowers owe under $20,000.

State of play: Meanwhile, tuition is rising across the California State University System next fall, including at San Diego State University.

  • That could affect the system's accolade that more than half of CSU students earning bachelor's degrees graduate without any education loan debt.

Of note: The University of California system also boasts that 57% of undergraduates graduate with no debt at all.

  • The average student loan debt for seniors at graduation in 2020–21 was about $18,400.
  • That's about a $195 monthly repayment over ten years, just below the national average of $200-$300 for student-loan borrowers.
Average federal student loans per borrower, by location
Data: Federal Student Aid; Map: Simran Parwani/Axios

Zoom out: Nationally and in California, borrowers between 35 and 49 years old owe the most in federal student loans.

  • Women and Black borrowers also face higher student loan burdens than their male and white counterparts.

Flashback: The Biden Administration wiped out student loan balances for almost 62,000 Californians who'd been paying off loans for 20 or 25 years under a new measure announced in July.

What's next: Borrowers worried about not being able to make payments right away can apply for the new SAVE Plan, an income-driven repayment plan that calculates monthly payments based on income and family size.

  • Plus, the Biden Administration is offering a year-long "on-ramp period" where borrowers won't be reported as being in default to the national credit rating agencies over missed payments.

Be smart: Use this Axios explainer to figure out your student loan status before payments resume.

🗣️ Tell us: Take this short survey to share how student loans are affecting you.

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