An estimated 43.5 million Americans owe money on student loans. And for many, those payments have been a massive burden.
President Biden has been fighting to cancel federal student loans, but whether he's successful in doing so is another story. The Supreme Court may very well block Biden's proposal, leaving those owing money from student loans with no choice but to pay up.
If you're on the hook for student loans, your best bet may be to assume that you're going to have to pay what you owe. Here are some financial moves to consider making in light of that.
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1. Get on a tight budget
The average monthly student-loan payment in the U.S. is $337, according to Motley Fool research. Your monthly payments may be higher or lower. But regardless of what they look like, it's important that you budget carefully so you're able to keep up with them.
Make a list of your essential monthly expenses, student-loan payments included. Figure out what those non-negotiable bills amount to, and then see how much money you have left over for things like retirement savings and discretionary spending.
It might help you to use a budgeting app to keep tabs on your finances. Or, you could go old school and stick to a spreadsheet or even pen and paper. The point, though, is to know where every dollar you earn is going so you're able to keep up with those student loans and avoid falling behind on any bills.
2. Pick up a side hustle
Covering your various bills and your student-loan payments isn't easy. And if you're on an entry-level salary, it might be extremely difficult.
But the gig economy is booming these days, and as such, a side hustle could come to your rescue. The money you make from a second gig is cash you can allocate for loan-payoff purposes. In fact, if you're able to earn enough extra money to cover your loan payments in full, you'll have that much more flexibility.
3. See if your employer will help
Some employers are stepping up to help workers repay their student debt. In fact, as part of the pandemic-era relief enacted in 2020, employers can give workers up to $5,200 each year tax-free for student loan-payoff purposes.
If your employer doesn't currently have a student loan-assistance benefit in place, ask for it, or negotiate for it if you're hunting for a new job. Granted, you could also just plain fight for a raise and use the extra money in your paychecks to cover your student-loan payments, but then you'll be paying taxes on your income. It's better to get tax-free student loan-repayment benefits if your employer is willing to get on board.
At this point, it's questionable as to whether student loans will be forgiven or not. Your best bet may be to assume that you'll be stuck paying those loans and plan around it. The good news is that as your income increases, that debt may be easier to manage. But make these moves immediately if you're worried about keeping up with your payments.
