Graduating from college is a thing of joy, but for some people, the burden of student loans overshadows the excitement.
You have high hopes of landing a high-paying job that can cover your expenses and also help you pay back the student loan, but unfortunately, you find yourself managing a low-income job andare faced with the harsh reality of how you will pay back your student loan.
If you found yourself in this situation, just know that you aren’t alone. There are millions of Americans, Canadians, and Europeans struggling to manage their student loan while earning less than they anticipated.
The fact is that I borrowed money for college education, and with the tips I shared with you here, I was able to pay it off even on a low income.
1. Opt For Income Income-Driven Repayment Plan
Income income-driven repayment plan is ideal if your federal student loan payments are unaffordable. This type of repayment is based on your family size and income, which allows you to make manageable payments without feeling the financial burden.
What I like about this option is that it offers an important safety net that borrowers need to make student loan payments manageable. It makes it easier to be consistent with the repayment, avoid defaulting, while handling other financial burdens you have.
2. Work In The Public Sector
Working a public job or for a non-profit organization is a relief if you find it hard to pay your student loans. In some cases, they are a path to student loan forgiveness. Public Service Loan Forgiveness ( PSLF) program is designed for student loan borrowers who work full-time for the government or for non-profit organization.
After making 120 qualifying payments (which equals ten years and without defaulting), the remaining balance on your federal student loans is forgiven.
3. Check Your Benefits
Many employers in the United States are beginning to realize that some of the people, especially young professionals who work for them, battle with student loan repayment.
Some of them are already offering assistance through different student loan payment program, which often comes as an employee benefit. So if you work in corporate America, check your benefits or ask your HR personnel to confirm if this is included. As you work for a company, your employer contributes a certain amount to ensure you remain consistent in paying off your student loans.
So if you’re job hunting or want to switch jobs, consider employers that offer such an incentive.
4. Be Wary Of Refinancing Student Loans
While refinancing student loans might look attractive, especially when private sectors advertise low interest rates, the risks associated with it, especially for federal student loans, are something you can’t always manage.
When you refinance your student loan, you take out a new loan from a private firm to pay off your existing student loan. But I don’t advise this for a federal student loan, because if you do, you lose access to all federal loan benefits, including the income-driven repayment and Public Service Loan Forgiveness (PSLF) program I mentioned earlier.
5. Reassess Your Budget To Free Up Cash
I understand how hard it can be when you are earning a small amount, have bills to pay, and still want to free up cash to chip away at your student loan payment.
But the fact is that you have to make such a hard decision to free yourself from student loan debt can be a source of depression.
Reassess your budget and cut off expenses that don’t really matter. Focus on needs and not wants. One of the effective ways that works for me is tracking my expenses monthly. This helped me identify spending I can cut down on, like monthly TV subscriptions, eating out, and unnecessary shopping.
If you have items in your house you no longer use, consider selling them on platforms like eBay to raise money to fund the repayment of your student loan.
If you live in expensive locations, move to less expensive areas. Double your source of income by doing remote online jobs that don’t require experience. These online jobs can make you money to pay your bills, allowing you to keep a large chunk of the money you make from your 9–5 job for your student loan payment.
6. Be Strategic With Private Student Loan
Private student loan payments are hard. They lack flexible repayment options, forgiveness, and protections. This is why I don’t recommend them. But if you happen to fall in this category, be strategic so you can effectively manage the repayment while working a low-income job.
Save enough to ensure you don’t default on payment, as there are consequences of lawsuits.
Get prepared and have a student loan lawyer who can help you in the event you get sued for defaulting.
You can also seek for loan modification with the help of your lawyer.
7. Remain Calm
Dealing with student loans while on a low income and still having more expenses to take care of can be overwhelming. But you can take the steps I recommended above to make it more manageable.
Starting from leveraging income-driven repayment plans to exploring public service jobs for forgiveness, there are plenty of options to help reduce the financial burden.
Also, explore potential employer benefits or ways to free up extra cash by cutting down on your spending.
Student loan debt doesn’t have to derail your financial future or give you sleepless nights. All you need is a proactive step to manage it so you can pay bills, manage expenses, be consistent with repayment, while planning towards a future where you will be debt-free and financially stable.
