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How to Pay Back Student Loans on a $15 Per Hour Job

Student loan repayment on a $15 per hour salary presents plenty of challenges, but there are opportunities for borrowers to eliminate debt.

Written By: Michael P. Lux, Esq.

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When I finished college, my first job paid $15 per hour. Repaying student loans seemed impossible.

I knew I wasn’t going to be one of those people who eliminated their student debt in mere months. I was worried that I might never be able to pay back my loans.

Fortunately, I was able to find a path to debt elimination. There isn’t one simple secret or trick. Instead, it requires finding a combination of tools and resources to keep things manageable.

Investigate Loan Forgiveness Opportunities

Student loan forgiveness is the silver bullet when it comes to debt elimination.

Paying back student loans on $15 per hour becomes a lot more reasonable when loan forgiveness enters the equation.

Public Service Loan Forgiveness is the most popular, but there are at least a dozen different loan forgiveness programs. These programs apply to a variety of loan types, occupations, and personal circumstances.

Before planning on student loan forgiveness, borrowers should keep two key facts in mind:

  1. Student loan forgiveness is not impossible. Some borrowers mistakenly assume forgiveness will never happen due to scary headlines in the media. There are certainly challenges, but assuming forgiveness isn’t an option could be a costly mistake. Student loan forgiveness is a reasonable strategy to pay off student debt.
  2. Student loan forgiveness won’t happen on its own. Other borrowers mistakenly assume they will qualify for forgiveness. This assumption is also dangerous because most borrowers will need to take steps to make sure their loans qualify for a desired forgiveness program.

Loan forgiveness won’t work for all borrowers. However, it does provide a path to debt elimination.

Make One Student Loan Your Priority

Repaying student loans can be overwhelming.

Focusing on attacking just one loan helps in two ways. First, it provides a clear goal with a meaningful chance of success. Second, from an accounting perspective, it is often the most efficient way of eliminating debt.

Borrowers shouldn’t ignore their other student loans. Instead, they should take whatever steps they can to reduce the minimum monthly payment to as little as possible. Borrowers with federal student loans can use the Department of Education’s Loan Simulator to see the many different payment options available. Private loan borrowers can call their lender to explore possibilities for lower payments. Finally, many of the tactics that borrowers can use to lower interest rates will also result in lower monthly payments.

After locking in the lowest monthly payments available, borrowers should use whatever free cash they have to attack one loan. As little as $10 per month can make a meaningful difference.

Knocking out one loan will eliminate one monthly bill. At that point, you can pick the next loan to attack and repeat the process.

Stick to a Budget

I’ve seen many finance websites tell readers they should spend X dollars per month on rent and Y dollars per month on food. Advice of this nature probably isn’t helpful.

Different people have different priorities and different circumstances. There is no way the same budget works for all borrowers living on $15 an hour. Some people have kids. Others live in a high cost of living area.

When it comes to budgeting, there are two important principals:

  1. Make a budget that you can actually follow. If you pinch every last penny and make it impossible to stick to your budget, you will fail. If your budget makes you miserable, you will fail. Sticking to a budget for one month means almost nothing. Sticking to a budget for years is the difference-maker.
  2. Track your spending. When money is tight, it is easy to say, “I don’t spend a dime unless it is a necessity.” This attitude justifies not tracking spending because there isn’t anything you can change. However, the borrowers that take the time to track their spending will learn a lot. Tracking spending is the best way to identify opportunities to save.

The borrowers who stick to these two simple budgeting rules will be able to make their $15 per hour put a much bigger dent in their student debt.

Living on $15 Per Hour and Paying Off Student Loans

The path to eliminating student debt isn’t easy, but it can be done.

The right mindset can also make a big difference. Those who obsess about student debt every minute of every day will drive themselves crazy. Those who ignore their debt will make things much worse in the long run. Instead, borrowers should take some time to make a plan, understand the factors that might change their plan, and revisit things at least once a year.

Debt elimination won’t happen overnight, but it doesn’t have to rule your life.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

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