3 Effective Ways to Pay Off Student Loans on a $50K Salary or Less, Know Here!
DEBARYLIFE – You could feel like your life is on hold if you graduate from college with a mountain of student loan debt and aren’t earning the kind of money you had hoped for.
In a recent CivicScience study, over one-third of respondents who make less than $50,000 stated that having student loan debt interferes with their capacity to save for retirement.
33% of people making less than $25,000 stated they are unable to save any money for retirement, and 32% claimed that their loan payments had an impact on their ability to save.
Three-quarters of individuals making above $25,000 but under $50,000 a year claimed they are unable to save for retirement. Thirty percent more indicated they couldn’t save as much as they would like to.
Fortunately, there are government programs designed to assist those with lesser incomes in managing their student loan payments in addition to other obligations. The creator of Payitoff, Bobby Matson, offered three advice pieces on how to pay off student debts without going over budget.
1. Repayment Plan Determined by Income
An income-driven repayment plan, according to Matson, can be a lifesaver for people whose annual income is less than $50,000. According to his statement, “These plans adjust monthly payments based on income and family size.”
10% of your disposable income is what is required for payments under a Save As You Earn (SAVE) plan. If the debts are just from undergraduate degrees, that amount decreases to 5% starting in July 2024. The remaining amount of your student loan debt is forgiven by the government if you keep up your payments for 20 to 25 years. Forgiveness may occur in as little as ten years if the original loan amount was less than $12,000.
According to StudentAid.gov, there is an additional benefit of the SAVE plan. The remaining interest for that month is paid by the government if your payments are insufficient to cover it.
2. Pardoning Public Service Loans (PSLF)
For those making less than $50,000 who work in certain fields—most notably in government or non-profit organizations—the Public Service Loan Forgiveness Program, or PSLF, offers relief from student loan debt.
Your loan is canceled in full after you’ve made 120 eligible payments each month. PSLF is a tempting option for people with high debt and low incomes since, as Matson noted, “there’s no limit to the amount of debt that can be forgiven under PSLF.”
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On May 1, 2024, however, StudentAid.gov announced that the PSLF Program would no longer be accepting new applicants. Forms can still be submitted, however they might not be processed right away while the system is updated.
3. Request Student Loan Debt Assistance from Your Employer
One obvious strategy to pay off student loan debt faster if you are making less than $50,000 and finding it difficult to make ends meet is to increase your income. Should you demonstrate to your employer the value of your work and reach or beyond performance expectations, you can be eligible to request a raise.
Employers, however, might be more inclined to make direct student loan contributions – at least through 2025, according to Paycor.com. The Consolidated Appropriations Act of 2020 permits companies to provide employees with tax-free student loan repayment incentives of up to $5,250 annually.
According to Paycor.com, almost one-third of businesses provide this benefit as of 2023.
(Y)our employer just may be open to lending a hand if you raise yours and express your need for assistance.” Asking questions is the best way to find out what your employer offers today or would be prepared to consider offering.