Millions of Americans owe money in student loan form. And for more than three years, that debt was something they didn't have to worry about. That's because student loan payments were put on pause in early 2020, as lawmakers rushed to provide financial relief to the masses at the start of the pandemic.
But alas, that reprieve has come to an end. October marks the first month of student loan payments coming due. And for many people, finding the money for those payments is going to be a challenge.
But a good number of borrowers are contemplating a big change to help ensure that they'll be able to keep up with their student loan payments. And you may want to follow their lead.
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What could an income boost do for you?
A lot of people are still having a hard time making ends meet, given the presence of lingering inflation. So throwing a monthly student loan payment into the mix is apt to hurt a lot of borrowers.
It's therefore encouraging to learn that in a recent survey by Nationwide, 59% of respondents said they're considering additional sources of income or side gigs to cope with the financial strain of having to make loan payments while continuing to fund a retirement plan. And that's pretty commendable.
Although side hustle culture may be alive and well these days, working a second gig on top of a main job isn't easy. But it may be just the thing that enables you to keep up with your student debt payments while continuing to steadily fund an IRA or 401(k) plan.
It's easy enough to let retirement plan contributions fall by the wayside when your bills increase -- such as if you suddenly have to pay hundreds of dollars a month toward student loans. But if you're able to boost your income, you can make it so those loan payments don't derail your retirement goals.
Let's say you normally put $300 a month into your IRA or 401(k), but now you need to pay that amount to your loan servicer over the next year. If you're three decades away from retirement and your portfolio generates an average annual 8% return, then losing out on $3,600 in contributions could actually mean denying yourself over $36,000 in savings due to lost investment gains.
So if you're able to work a side hustle that allows you to make your loan payments and IRA or 401(k) contributions, you won't have to worry about missing out on funds later in life. Plus, having that extra income could simply reduce your stress load, and that alone has value.
A sacrifice worth making
While it's certainly not an easy thing to take on an additional job, one good thing about today's gig economy is that it's extremely flexible. So if you have periods when your main job is busy, or when life is busy, you can potentially put your side hustle on pause. But it's worth taking on that gig if it makes it possible to keep up with your student loan payments without stress, all the while working toward other important goals.
