Question: I have over $200,000 in student loan debts, most of it lent by the federal government, but a month before finishing my master’s in public health, I had to temporarily withdraw due to some health issues. My payments are paused right now, but I don’t know what I’m going to do when I have to start paying back the debt. Currently, I am working as a therapist for an online counseling provider and making approximately $35,000 a year. I live in Florida, with my ex-boyfriend, who struggles to find work. I know that I should finish my master’s program, but I’m so sick of being in school, and I’m already barely getting by. I’ve talked to my lender about income-driven repayment plans. They proposed that to start, I could pay back $800 a month. My rent is $1,250 a month. How am I supposed to live? I have to find a way to pay back the $200,000.
Answer: At the outset, paying back $200,000 in student loan debt in a profession that pays a median salary of under $50,000, seems like an impossible feat. You’re already talking to the lender about an income-driven repayment plan, which is smart (and note that you can’t get this kind of plan with private loans), and even still, it feels insurmountable. But there are ways you can tackle this: We asked professionals what options you, and others in a similar situation, might want to consider when repaying students loans, from loan forgiveness, to income-based repayment plans, and more.
In your case, one option to consider is whether you qualify for student loan forgiveness, says student loan expert Mark Kantrowitz, the author of multiple books including “Who Graduates from College? Who Doesn’t?.” Many full-time government and nonprofit jobs may qualify for loan forgiveness, and some healthcare professions can qualify too (see a list of professions with loan forgiveness here). “After 10 years worth of payments in an income-driven repayment plan while working full-time in a qualifying public service job, the remaining debt will be forgiven, tax-free,” says Kantrowitz. Consider applying for such jobs while you finish your masters degree.
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Kantrowitz also notes that finishing your degree will make you statistically more likely to pay it back. “This last bit of the marathon is the most grueling,” says Anna Helhoski, the student loan expert at NerdWallet. “But finishing the degree is what makes taking out all of the debt worth it.” And when you do, you’re going to want to look for work that pays well (and/or weigh jobs with loan forgiveness), and consider other ways you can boost your income so you can tackle your debt.
At this point, you may be thinking: Ugh, can’t I just discharge my debts in bankruptcy (the answer: it’s possible, but very hard to do), and what happens if I default on the loans? If you do default, then the entire past due balance of your loan will become immediately due, and your wages may be garnished, among other punishments.
While refinancing might be an option for some as rates are very low right now — see the lowest rates you can qualify for here — in your case, you likely want to stay on the income-based repayment plan (refinancing federal student loans can strip away these kinds of repayment plans). For the loans you have that are private student loans, refinancing may make sense. This guide will help you figure out if refinancing is right for you.
So the best option might be to the bullet, finish those final classes, graduate, and then find a steady job working a well-paying job where you can get at least part of your loans forgiven. There might not be some fairy godmother who pays off your debt entirely, but the future is not entirely bleak.
*Letters edited for clarity and brevity.