College is a time to get out on your own and find your path, but the high cost of going to college affects students for years after they’ve graduated.
If you have a lot of student loan debt, you might worry that you’ll be living on ramen and racking up credit card debt for the rest of your life. But there are a few things you can do to ensure you can keep living your best life while repaying your student loans.
LGTBQ grads face more student loan debt
Studies show that LGBTQ students graduate with more debt than their cishet peers, and research by UCLA School of Law Williams Institute found that more than one-third of LGBTQ adults 18 to 40 years old are carrying over $93 billion in federal student loans.
The same study found more than half of trans adults have federal student loans, and LGBTQ adults are more likely to have federal student loans than non-LGBTQ adults.
The struggle is compounded by the fact that queer grads are less likely than their cishet peers to earn a salary of $50,000 or more. Additionally, LGBTQ grads are more likely to choose to live in a large city to be nearer inclusive communities, which means their cost of living can also be higher than their cishet peers.
And then there’s the discrimination that queer people can face both in the job market and when trying to find financial help. A survey by Student Loan Hero found about four in 10 LGBTQ borrowers said they’d been denied financial help due to their sexual orientation.
But despite the high cost of college and the associated challenges for the queer community, 62% of LGBTQ graduates in the Student Loan Hero survey said that they were glad they went to college. That’s because college is often a more welcoming and affirming environment than queer folks are used to.
The benefits of college for many in the LGBTQ community are clear. But if you’re struggling with paying down your high student loans, there are a few ways you can find help and relief.
1. Sign up for an income-driven repayment plan
If you have trouble finding a well-paying job after graduation, you’re not alone. The average salary for a new grad varies depending on location and major, but according to a study by the National Association of Colleges and Employers, the average starting salary for graduates is just around $50,000.
To a new worker, that might sound like a lot, but once you factor in tax, health care (including things like HRT if you’re trans or therapy if you had a traumatic coming-out experience), rent, utilities, groceries and car loans, you’re not left with much to spare. Add student loan repayment on top of that, and many queer grads find themselves struggling to make ends meet.
If you have federal student loans, income-driven repayment plans can help. They take your income and expenses into account and set affordable monthly payments so you won’t have to choose between eating food and making a loan payment.
The U.S. Department of Education offers four types of income-driven repayment plans: Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), Income-Based (IBR) and Income-Contingent Repayment (ICR).
- Monthly payments at 10% of your discretionary income.
- 20-year repayment plan if you’re repaying undergraduate debt, or 25 years for graduate or professional study debt.
- Monthly payments at 10% of your discretionary income; will never be more than the 10-year Standard Repayment Plan amount.
- 20-year repayment plan.
- Monthly payments at 10% of your discretionary income for loans borrowed after July 1, 2014.
- Monthly payments at 15% of your discretionary income for loans borrowed before July 1, 2014.
- Payments will never be more than the 10-year Standard Repayment Plan amount.
- 20-year repayment plan for loans borrowed after July 1, 2014.
- 25-year repayment plan for loans borrowed before July 1, 2014.
- Monthly payments at the lesser of two options: 20% of your discretionary income, or what you would pay on a repayment plan with a fixed payment over 12 years.
- 25-year repayment plan.
The best part? Once you reach the end of the repayment period on any of these plans, the rest of your debt is forgiven.
2. Determine whether you qualify for public service loan forgiveness
If you’re employed by a U.S. federal, state, local or tribal government or a nonprofit organization, you could qualify for public service loan forgiveness (PSLF).
This program will cancel (or “forgive”) the remaining balance on your federal student loan after you’ve made payments for 120 months while working for a qualifying employer.
To get PSLF, you must be a full-time employee, repay your loans under an income-driven repayment plan, and either have Direct Loans or consolidate your other federal student loans into a Direct Loan.
Good to know: A Direct Loan is a borrowing program for students that’s financed by the U.S. Department of Education (what you most likely have if you borrowed federal loans for undergrad).
3. Refinance your private loans
If you took out a private loan to pay for college, you won’t qualify for an income-driven repayment plan or for public service loan forgiveness. Instead, you can look into refinancing your student loan to help minimize your monthly payments and decrease your loan’s interest rate.
When it comes to refinancing your loans, you have many lender options. But there are some eligibility requirements.
Generally, you need to have a credit score in the high 600s or higher and a steady and predictable income. If your credit score is too low or your income varies because you freelance or rely on tip money, you could get a co-signer to help you refinance your loan.
The benefits of refinancing your student loan include:
- You could decrease your monthly payment amount.
- You could pay less interest over the life of the loan.
- You could pay off your student loan faster.
- If you had a co-signer on your original loan and don’t need them anymore, refinancing releases them from the loan.
If you’re considering refinancing your student loan, shop around to compare lenders. Do your research on each lender to ensure their values align with yours. You don’t want to end up owing money to an institution that supports anti-LGBTQ politicians or organizations.
4. Consolidate to simplify your federal loans
If you have more than one federal student loan, look into consolidation, which combines multiple federal loans into a single loan to make payoff easier.
While consolidation won’t decrease your interest rate, it can make repayment easier since you’ll have one bill each month instead of several. Your consolidated loan may also have a longer term (up to 30 years) than your individual loans, which could get you a lower monthly payment.
If your federal loan isn’t a Direct Loan, you’ll need to consolidate in order to be eligible for PSLF.
But if your loan is a Direct Loan and you’ve made qualifying PSLF or income-driven repayment plan payments before consolidating, you’ll lose credit for those payments. Weigh the pros and cons of consolidation before making the switch.
5. Make a budget (and stick to it)
If you don’t already have a budget, there’s no better time like the present to start making one to boost your financial situation. There are several templates online that can help you make a budget, or you can download an app that tracks your expenses so you can identify where to cut back.
As an added bonus, when you use Daylight’s banking platform, you’ll get a monthly spending report that tells you how queer-friendly your shopping is, allowing you to set a budget and stick to your principles.
Student loan debt can be scary, especially if you’re a recent grad facing monthly repayments for the next 10 to 30 years. By taking advantage of your options, you can lower your monthly payments or interest rate so you can live your life without fretting over your loans.
Catherine Hiles (she/her) is a writer, editor, mother, friend and ally. She lives in Ohio with her husband, two kids, and sweet but wild pit bull mix.
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