For people who attended college with the help of student loans, it's essential that they obtain a high-paying job as soon as possible. If they do not, the student loan payments can seriously affect their ability to save for retirement or buy a home.
Two government programs may help those who earn less than $50,000 per year.
The Save As You Earn program adjusts monthly payments based on income and family size. The plan sets payments at 10 percent of discretionary income. Beginning in July 2024, that amount drops to 5 percent for undergraduate loans. If the borrower still has loans after 20 to 25 years, the government forgives the remaining balance. For loans under $12,000, borrowers can get forgiveness in 10 years. According to StudentAid.gov, if your payments are not enough to cover interest every month, the government pays the rest of the interest.
The second program is Public Service Loan Forgiveness (PSLF). Those with federal Direct Loans who work full-time for the military, a government agency, or a not-for-profit can apply for PSLF, make 120 qualifying payments on their loans, and then have the remaining balance forgiven. The key issue here is whether the employer is qualified. For-profit companies, labor unions, or political organizations don't qualify.
For more details, visit studentaid.gov/manage-loans/forgiveness-cancellation/public-service
