I am a teacher, I still live with my parents and I have $103,000 in student debt, which is more than twice my salary. What are my options?

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Question: “I’m a 33-year-old fourth-grade teacher who makes $41,098 a year before taxes and about $103,000 in student loans. I still live with my parents because I can’t afford a mortgage or get a loan because my credit is poor from student loan debt. What are my options? »

Responnse: Student loan debt that far exceeds one’s annual salary is a common occurrence, and having high debt adds a substantial burden to your monthly budget, even if you’ve cut housing costs by living with mom and dad. . With student loan repayments set to resume in May, it’s time to take action to get your own financial situation in order. The good news, says Andrew Pentis, loan expert and certified student loan counselor at StudentLoanHero, is that in terms of federal loans, education is an area where there are “many repayment assistance programs and cancellation of student loans”. Here are some options.

Do you have a question about deleveraging? Email chill@marketwatch.com.

Income-driven repayment plans and other repayment options

First, review – and strategize – your monthly loan repayment. If yours is too high, consider applying for an income-based repayment plan with your federal loan officer, says Anna Helhoski, student loan expert at NerdWallet. “This will peg your payments at a portion of your Discretionary Income and extend the payment period,” she says. The standard repayment term is ten years; with an income-based repayment plan, you can get a 20-25 year repayment plan, after which your remaining balance is forgiven.

“Income-based repayment should reduce payments, but the borrower won’t pay off their debt quickly and interest will continue to accrue,” Helhoski adds. “It may not matter as much to a borrower who is a teacher who may have federal debt forgiveness options.” (We will come back to this.)

There are four income-based repayments plans including Revised Pay As You Earn (REPAYE), and they are designed to keep monthly payments affordable relative to income. Each comes with eligibility requirements as well as caveats to consider (regarding issues such as taxes and marital status). Depending on the plan, the repayment term will be 20 or 25 years and the discretionary income percentage will be 10%, 15% or 20%, says Mark Kantrowitz, author of “How to Appeal for More College Financial Aid.”

“Borrowers on income-driven repayment plans may qualify for payments as low as $0,” says Pentis. “There is a good chance that this individual’s payment will not be zero, but in all likelihood it would drop. This would provide wiggle room in the monthly budget.

For private loans through a bank, credit union or other lender, experts advise going to the source. Explain that you would like a temporary or permanent change, which could be a lower interest rate or a longer repayment period. Note, however, that the responsiveness and flexibility of private lenders varies.

Student Loan Forgiveness

There are two loan forgiveness programs that public school teachers can potentially qualify for – Teacher Loan Forgiveness (TLF), which experts advise initially, and Public Service Loan Forgiveness (PSLF).

TLF is a federal program for full-time qualified educators who work in low-income schools. “After five straight years of teaching, they can get up to $17,500 back in their direct federal loans,” says Helhoski.

What if there is a debt left, as there would be in the case of this borrower. This is where the PSLF comes in. “You can double the deduction,” says Pentis. The PSLF allows people who repay 120 loans while pursuing a career as a civil servant or teacher to obtain a portion of their student loan tax-free.

“This borrower might want to take advantage of a limited waiver currently in place that would count all payments made while working for an eligible employer,” says Helhoski. “It came into effect a few months ago and it will be in place until the end of October.”

Until October 31, 2022, borrowers can receive credit for past payments made that would not have previously qualified for the PSLF. If you have already been refused the PSLF, you may be eligible under the to renouncer.

A long-term consideration, according to Kantrowitz: the income-based repayment discount kicks in after 20 or 25 years, depending on your plan.

As you master student loan repayments, you can also simultaneously rehabilitate your credit rating. Ultimately, this will make getting a mortgage or other loans more feasible.