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I only make $41K a year, but owe $189K in student loans. What should I do?

I only make $41K a year, but owe $189K in student loans. What should I do?
Written by Publishing Team

Tips for paying off student loans

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Question: “I’ll owe about $189,000 on my student loans when they start paying off. I’m so nervous. I quit my job and lost my apartment. I have a lot of debt and I moved from New York to Texas looking for work. I started an e-commerce business with an oil pumping company, but I I’ll only make $41,000 a year. I’m 45 and I live out of my car until I move into the studio on the 15th of this month. It helps.”

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Answer: You’ve already taken some huge steps in the right direction and you have a number of reasons to be optimistic. “Going to take advantage of the lower cost of living just shifted half your budget. With no state income tax and low unemployment plus a low cost of living, Texas is a good choice,” says Jane Grant, certified financial expert at Perryman Financial Advisory. In addition, settling your living situation is likely to improve your state of mind – and help you realize that these loans can be repaid.

First, the emergency student loan moratorium is now set to expire in May 2022, so you’ll want to think about how payments are processed after that. One strong option to consider is “trying to get your loans through an income-driven repayment plan, which will cap your monthly payments at 10% to 20% of your discretionary income,” says Rebecca Safire, certified student loan advisor and education finance expert at Student Loan Hero. . Since your payments will be adjusted according to your income, we hope it won’t be as stressful as it would be on the Standard plan.

“It may help to call your student loan service before repayment begins to talk about your options and see which arrangement works for you,” Safier says. Additionally, in most cases, any remaining loan balance is forgiven under income-driven repayment plans if federal student loans are not paid in full by the end of the repayment period in 20 to 25 years.

If you qualify for income-driven payment plans, you can choose from options such as income-based payment, income-based payment, income-adjusted payment, and income-possible payment. “They all have their pros and cons, so be sure to weigh your options carefully,” says Amanda Bush, tertiary education and debt expert at Student Loan Hero.

Some borrowers who are seriously struggling to repay loans ‘may be able to defer [their] For longer payments by applying for a deferral or forbearance,” Saphir explains. Both programs allow you to temporarily suspend federal student loan payments, although it is important to know that interest often accrues during this period, so your student loan balance will rise. Additionally, these programs may affect your ability to obtain loan forgiveness, and you will usually have to qualify for these programs.(See details of these options here.)

Moreover, “sticking to a budget or finding a side hustle may help meet those payments,” says Bush. Increase your income to pay off loans more easily. Networking can help. “Join local groups with similar interests like playing sports, gardening, cooking or church. Identify roots and let people know what you want to do,” says Grant. Even in a tight job market, most jobs come through connections – and a second job can really help you deal with your student loans. “There are some industries that are desperate and willing to be more resilient than they were in the past. Pick two shifts at a grocery store, restaurant, or retail location…Finally, remember that Rome was not built in a day and student debt is not paid off in a year,” As Grant says.

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