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If you have a low income and sometimes struggle to make ends meet, you’re hardly alone. According to a July 2026 CNBC/SurveyMonkey Quarterly Money Survey, 63% of Americans surveyed consider themselves to be living paycheck to paycheck, suggesting that well over half of the population is feeling somewhat strapped.

Saving money can be especially challenging right now due to persistent inflation, which causes consumers to spend more just to maintain a basic standard of living, and heavy debt loads, with the average person carrying over $6,500 on credit cards. Together, these two forces can quickly eat away at your income, making the goal of saving feel out of reach.

The good news is that you don’t have to stay stuck; you can take steps to improve your financial situation, no matter what you earn. Below are 16 simple strategies that can help you reduce costs, manage your budget, and gradually build long-term financial security.

Smart Ways to Save Money With Low Income

When money is tight, traditional personal finance goals like saving 20% of your income or building a six-month emergency fund right away may seem completely out of range. Instead, the key is to focus on setting up a basic budget, micro-savings, and eliminating drains on your bank account. Here’s how to get started.

1. Choose a Low-Income Budget Method That Suits You

A budget gives you a way to track your income, spend more intentionally, and plan toward goals. It paints a picture of how much money you have coming in and going out and how you’re allocating funds, which you can use to identify areas for improvement. A budget can also help you see what resources you have available to cover your living expenses. With it, you can see how to make money stretch further.

A budget helps you track your income, spend more intentionally, and plan towards goals. By providing a clear picture of your cash flow — what comes in versus what goes out — a budget reveals exactly where your money is going and helps you identify opportunities to save. Ultimately, it allows you to make your income stretch further and ensures you have the resources needed to cover your living expenses.

There are many different types of budgets, including the 50/30/20 budget, zero-based budgeting, and envelope cash stuffing. But you can start simply by reviewing your financial statements from the last few months to determine your average take-home pay, fixed monthly costs, and typical nonessential spending. This clear picture will make it easier to adjust your habits and identify opportunities to cut back.

2. Cut Money Spent on Food and Drink

If you’re thinking about how to save money with a low income, one wise move can be dining in. That may mean opting for pasta at home instead of the cute Italian place nearby.

Making meals at home is typically cheaper than eating out. And the gap has widened: In recent years, restaurant prices have risen faster than grocery prices. Just keep in mind that cooking at home can cut costs as long as your grocery bill is sensible. Look for budget-friendly recipes that are simple and use all the ingredients in your pantry. Search online for affordable recipes, including “recipes under $10.” You’ll likely find many options.

Another way to save money on groceries is to choose more affordable proteins — such as beans, eggs, chicken, and canned fish — over pricier cuts of beef. Also consider saving alcoholic beverages for weekends or special occasions only, and reach for lower-cost drink options, such as homemade iced tea, flavored seltzers, or good old tap water, on the weekdays.

3. Pay Down Debt One Step at a Time

Studies have linked high levels of personal debt to increased stress and anxiety. Proactively paying down what you owe can help alleviate that pressure while saving you on interest and creating a stronger foundation for your future savings.

How to approach debt reduction? Be sure to always pay at least the minimum amount due. Then consider these two techniques to help get rid of your debts on a low income:

•   In the snowball method, you use extra funds to pay off the smallest debt first, giving you a sense of accomplishment for wiping out a balance. Then you move on to the next-smallest debt, and so on.

•   In the avalanche method, you use extra funds to pay off debts in order of interest rate, regardless of the balance. You start with the highest-interest debt and work down to the lowest. This approach minimizes the total interest you pay and shortens your overall time to become debt-free.

4. Reduce Nonessential Spending

When creating a budget, it’s a good idea to create two main spending categories: essential and nonessential expenses.

Essential expenses will include housing, utilities, groceries, basic transportation, healthcare, and minimum debt payments. Nonessential expenses are optional costs for things you want rather than need, such as entertainment and clothing you like but don’t require. For example, if you’re a sneakerhead or handbag collector, it may be time to pause shopping. But if you need fresh clothes and shoes for work, set a target amount you can afford to spend that month. Make your dollars stretch with sale racks at stores or secondhand steals.

5. Swap to Cheaper Entertainment Subscription Models

Can’t live without Netflix? What about HBO, Disney, and Hulu? Combined, those streaming services can debit a fair amount of money out of your checking account each month (or, depending on how you pay, year).

While it’s important to unwind, cutting paid entertainment is often worth the savings. Consider utilizing free entertainment on your TV or computer. There are plenty of ad-supported apps that offer free on-demand and live streaming services. You can also buy a standard TV antenna to pick up major local broadcast networks completely free of charge.

Finally, try the library. Most carry more than just books: They often offer movies, too. You just need a library card.

Recommended: How to Save 5k a Year

6. Downsize Your Largest Fixed Expenses

Another way to budget on a low income is to cut some of your large monthly bills. Your biggest burden is likely housing, which is a natural place to start, even if your options feel limited. Several factors affect rent or mortgages, such as location and amenities. If your lease is ending and moving is a viable financial option, consider looking into neighborhoods with lower average rents or a place with fewer perks (like a patio, pool, or in-unit laundry).

Other options include getting roommates or, if it’s feasible, even going rent-free. If you have family nearby, it might be worth asking to live with them for a low fee or even rent-free, provided you have a plan to get on your feet or can contribute to the household (say, by cooking or cleaning).

Transportation is another large cost. If your job is a safe and reasonable distance to bike to, try it out. Bikes are generally inexpensive to maintain, plus they offer the benefit of staying fit and going green.

7. Save What You Can

You don’t need a large windfall to start building your savings. Even on a tight budget, saving whatever you can — even if it’s just $5 or $10 a week — is an important step toward financial security. Small adjustments in your spending, like giving up a weekly fancy coffee or packing your lunch more often, can help you free up these amounts. Remember, every dollar saved is a step forward, and these consistent, modest efforts add up to a significant sum over time.

8. Pay Yourself First

One of the easiest ways to ensure you save money is to prioritize it over other spending categories. This means transferring a set amount of money from checking into savings the moment you get paid, before tackling your regular bills. Whatever is left over is the money you can spend on essential and nonessential expenses. Moving your savings money out of your checking account immediately reduces the temptation to spend it.

9. Automate Your Bill Payments

Automating your bill payments might feel like relinquishing control, but it can be an effective way to manage your money. Not only does it help you avoid costly late fees and protect your credit, but many service providers also offer discounts for enrolling in automatic payments.

To use this method safely and avoid overdraft penalties, consider scheduling your automatic withdrawals to occur one or two days after your payday or setting up low balance alerts on your checking account.

While the beauty of this tactic is that you set it and forget it, it’s still important to review your digital statements every few months to check for any errors and make sure you’re not paying for services or subscriptions you no longer need.

10. Lower Your Car Expenses

A car can be expensive. Some tips to make it more affordable:

•   Buy rather than lease. Leasing essentially acts as a long-term rental where you only pay for the car’s depreciation during the lease term. Purchasing allows you to eventually build equity and eliminate the monthly payment altogether once paid off. You generally get more value from paying off a car compared to leasing a car.

•   Buy used. Used cars are typically cheaper than new cars. And because they’re used, the insurance tends to be cheaper as well. Buying a preowned car also means it won’t lose value as quickly as a new car. Some estimates say that a new car loses an average of 16% of its value in the first year.

•   Choose a car that gets great gas mileage. The high cost of filling up an SUV or truck tank week after week can put a serious strain on your wallet. If you’re paying for a gas guzzler, downsizing to a car that gets better gas mileage can easily save thousands over a multi-year period.

11. Leverage Free Community Entertainment Options

You can save money and still have a social life by taking advantage of free and low-cost local entertainment. Towns, public libraries, and parks departments frequently host free events like outdoor movies, summer concerts, and festivals. Replacing just one or two commercial nights out each month with these zero-cost alternatives can easily save you hundreds of dollars a year to put toward debt or savings.

Also remember that libraries can be a goldmine for free entertainment. They typically offer free access to streaming movies, digital audiobooks, video games, and even free passes to local museums. Tapping these local perks can be a great way to relax and have fun while keeping your budget on track.

12. Identify and Overcome Costly Financial Habits

If you want to improve your financial situation, it’s important to take a good look at your current spending habits. Do you buy groceries at a gourmet deli instead of a standard supermarket? Do you eat out often because you forgot to pack a lunch? Do you leave the air conditioning running in your apartment while you are out all day?

These are all expensive habits you can easily change. For example, you might find a more affordable grocery store where your dollar stretches much further; try meal prepping on weekends so you can easily pack your lunches for the workweek; and run appliances only when necessary. These simple adjustments can add up to significant savings over time.

13. Execute a Targeted No-Spend Month Challenge

A no-spend challenge can be a (yes) fun way to save. A no-spend challenge means that you avoid discretionary spending altogether for a set period of time, such as 30 days. During that time, you only spend on necessities, such as rent and groceries, and don’t spend money on anything else — no movie theater tickets, clothes, or even chocolate. You might want to let your friends know you are doing the challenge so they don’t tempt you into spending. They might even join you.

At the end of the challenge, you’ll have likely saved a significant sum of cash. You may also find that you didn’t miss some of the things you stopped spending on and decide to permanently cut them out of your budget or reduce how much you spend on them.

Recommended: Biweekly Savings Challenge

14. Automate Savings Transfers With Vaults

Manually moving money requires willpower. Automation removes human emotion and friction entirely. By setting up an automated transfer from checking to savings for the same day each month (ideally right after you get paid), you don’t have to remember to do it yourself.

Some banks even allow you to direct transfers into digital savings “buckets” or “vaults.” Rather than going into one pool of savings, you can earmark savings for specific goals, such as an emergency fund or vacation. This can help you track your progress, stay motivated, and avoid accidentally draining your rainy day fund to pay for a trip to Europe.

15. Audit and Negotiate Household Utility Contracts

You may be able to save hundreds of dollars a year by auditing and negotiating your bills. Providers often gradually raise rates for loyal customers while offering deep discounts to new ones to bring in more business.

To potentially lower your costs, first review your bills for internet, phone, and home security to assess what you’re paying, including all listed fees. Next, check what local competitors are charging for the same services. When you call your provider, ask for the retention department, present your information, and request a reduction or a price match. Be polite but firm, and don’t feel you need to accept their very first offer.

While water and electric rates are fixed, services like internet and cell phones are often negotiable. Just check for cancellation and start-up fees before making any final changes, since this can eat into your savings.

16. Access Local and Federal Assistance Programs

If you find yourself still living paycheck to paycheck, there’s help. If you have substantial debt, consider reaching out to the nonprofit National Foundation for Credit Counseling (NFCC). They offer free and low-cost debt and credit counseling, along with other services.

In addition, cities, states, and the federal government provide help in the form of subsidized housing, discounted healthcare, and free groceries. To navigate these resources, you can use the official government benefit finder to match your specific needs with available programs. In addition, you can call the 211 network to speak with a specialist who will evaluate your situation and connect you directly with local support organizations.

Why Saving Money With a Low Income Is Possible

No matter what your income, it can be tempting to live like a rock star or just try to keep up with your higher-earning friends. Or you might feel like your smaller earnings aren’t worth saving, and you’ll wait until you make more. But you may be able to save more than you think, even on a lower income.

If you make saving a priority and adjust your lifestyle to your income, it can pay off and improve your financial well-being. Simple changes such as learning to budget, choosing lower-cost groceries, swapping out driving for cheaper (and greener) forms of transportation, and buying secondhand can all help you take control. These moves can also help you pay down any debt you may have, build your rainy-day savings, and achieve longer-term financial goals.

The Takeaway

Financial health isn’t about how much you earn, but how you manage what you have. To take better control of your finances, you might start with a simple, honest look at your budget to identify exactly where your money goes each month. From there, it’s about making small, consistent shifts — like swapping out expensive habits for affordable alternatives and setting realistic savings targets. Staying consistent and automating some aspects of your money management can help you stick with your plan and see real progress over time. Remember that every dollar you set aside, is a step closer to meeting your short- and long-term financial goals.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How can I build an emergency fund quickly on a limited income?

Start with a small, specific goal, such as $500 or $1,000, rather than trying to save several months of expenses at once. Look for ways to redirect money from nonessential spending, reduce recurring bills, or earn extra income. Automating even a small transfer each payday can help you make steady progress. Consider keeping your emergency savings in a separate savings account so it’s accessible when needed but less tempting.

What are the best free tools for budgeting on a small income?

Free budgeting tools can help you track spending, categorize expenses, and plan around your income. Options include free budgeting apps, spreadsheets, and budgeting features offered by some banks. A simple spreadsheet may be enough if your finances are relatively straightforward. The best tool is one you’ll use consistently. Look for features such as spending tracking, bill reminders, savings goals, and easy-to-understand reports without requiring a paid subscription.

How can I safely lower my fixed monthly expenses without hurting my credit score?

Start with expenses that don’t directly affect your credit, such as insurance, internet, phone service, and subscriptions. Compare providers or ask about lower-cost plans. If you have debt, avoid simply stopping payments or closing credit accounts without understanding the potential consequences. Continue making at least the required payments on loans and credit cards. Before canceling a credit card, consider how it could affect your credit utilization and length of credit history.

How can I save $1,000 a month on a low income?

Saving $1,000 a month may not be realistic for everyone, especially on a low income. Start by calculating how much you can save after covering essential expenses and required debt payments. To work toward a $1,000 goal, you may need a combination of cutting expenses and increasing income through additional work or other opportunities. Breaking the goal into weekly or paycheck-based targets can make it easier to track. You generally want to avoid cutting necessities or taking on high-interest debt to reach a savings target.

What is the $27.40 rule?

The $27.40 rule is a savings challenge based on saving $27.40 every day. If you save that amount for a full year, you’ll have about $10,000. The concept is intended to illustrate how relatively small, consistent savings can add up over time. However, $27.40 a day may be difficult for someone living on a low income. Consider adapting the idea to an amount that fits your budget, such as $1, $5, or $10 a day.

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Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

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SOBNK-Q326-117

Across the U.S., an average of 29% of American credit cardholders have $10,000 or more in credit card debt.

Five-figure credit card debt, and the interest that accrues along with it, can feel overwhelming. It’s the kind of debt that keeps people up at night and prevents them from pursuing their other financial goals.

But that debt doesn’t have to stick around forever. With a strategy, chipping away at $10,000 in credit card debt is achievable. Here are some options for how to pay off $10,000 in credit card debt.

Tips for Paying Off $10,000 in Credit Card Debt

Paying down $10,000 in credit card debt takes discipline and time. These tips and tools could help speed up the journey toward debt freedom.

Consider a Side Hustle

If your budget doesn’t have much wiggle room to make extra payments toward credit card debt, you might consider finding ways to generate more income. Starting a side hustle could be a powerful way to pay down a $10,000 credit card debt faster. Whether it’s grabbing a job in the gig economy or taking a catering job on the weekends, you can put those paychecks toward your credit card debt.

Ask for a Raise

If time is limited for a side hustle, think of how you could make more money in your current role. Is it time to ask for a raise, for instance?

Similarly, switching jobs may land you a higher salary. Just make sure that extra income goes toward debt payoff, and not lifestyle creep.

Switch to Cash

When you’re paying down $10,000 in credit card debt, it’s important to avoid accruing a higher balance. Adding more debt can not only feel discouraging, it may also extend your payoff timeline.

As you tackle paying down debt, consider avoiding any further spending on credit cards. This can take the form of paying for things in cash or using a debit card so that you can only spend what you actually have. Making a switch to cash means you’re less likely to add to your burden of debt.

Recommended: What Is the Trump Credit Card Interest Cap?

Debt Management Plans

While tips and tricks may help you pay down $10,000 in credit card debt, you may have to consider a larger overall strategy to move you towards payoff. Having a debt management plan in place can take some of the pressure away and could put you on a track toward paying off debt faster.

Two popular methods to accelerate debt repayment are the snowball method and the avalanche method.

Snowball Method

The snowball method prioritizes paying off small debts first and working your way up. Here’s how:

1.    Make the minimum monthly payments on all debts.

2.    Take inventory of all your debts and order them from lowest outstanding balance to highest.

3.    Put any extra cash toward the smallest balance debt.

4.    Repeat this until the lowest debt is paid off.

5.    Next, move onto the next lowest debt, adding the surplus cash from Step 2 to this card’s monthly payments.

6.    Continue to repeat this process, scaling up to the high-balance debts once you pay off the lower ones.

While this method may seem counterintuitive because of the interest that high balances can generate, starting off with small wins has psychological benefits for some people. Having those wins early on may motivate you to move forward.

Avalanche Method

If you tend to be more disciplined and don’t mind playing the long game, you might prefer the debt avalanche method to pay off $10,000 in debt. Here’s how to deploy the avalanche method:

1.    Make minimum payments on all debts.

2.    Compile all your debt and order it by interest rate from highest to lowest.

3.    Put any extra cash toward the debt with the highest interest rate.

4.    Repeat until the highest-interest debt is paid off.

5.    Move onto the debt with the next-highest interest rate. Put any extra cash toward this balance until it’s paid off.

6.    Continue this process, prioritizing the highest interest debt first, until all balances are settled.

Typically, the debt avalanche saves more money in interest payments in the long run. However, it can take time to see a win with this method, as opposed to debt snowball.

Recommended: Creating a Credit Card Debt Elimination Plan

Credit Card Debt Forgiveness

Credit card debt forgiveness is not as simple as waving a magic wand at your balances and watching them disappear. Forgiveness doesn’t mean the debt is completely erased, and it comes with its own drawbacks.

Credit card debt forgiveness only becomes an option when a cardholder stops paying their debt and the credit card company sells the outstanding balance to a debt collector. From there, you can negotiate with the debt collector as to how much debt to repay.

Debt collectors typically buy debts for far less than their face value and thus are willing to recuperate just a portion of the initial amount owed. For example, if you owe $10,000 in credit card debt and it goes to collections, you may be able to negotiate to settle the debt for just $5,000. That payment may be a lump sum or small payments over time.

While credit card debt forgiveness means paying less than the total owed, it has a fair share of drawbacks. Neglecting credit card debt can wreak havoc on a person’s credit score, and you’ll still need to pay some portion of the debt.

Additional Options for Paying Off Debt

Credit card debt forgiveness isn’t the only route toward paying off $10,000 in credit card debt. Depending on your situation, one of the following solutions may work.

Balance Transfers

Some credit card companies allow cardholders to make credit card balance transfers. That means you transfer the outstanding balance from one credit card to another, often with an introductory low interest rate or no interest.

Balance transfers do come with fees, but depending on how much you owe and how much you could save on interest, it could be worth it in the long run. However, keep in mind the interest rate the balance transfer offers may be for a limited time. You’ll want to pay off the remaining balance before the rate rises, or you could owe more than you did before the transfer.

Personal Loans

There are a number of common uses for personal loans, including paying off credit card debt. Often, personal loans will have lower interest rates than credit cards, which could help you pay down your debt faster and save on interest. If you’re struggling to figure out how to pay off $10,000 in credit card debt, consolidating multiple balances into a single loan also may streamline the process.

Your credit score can impact whether you get approved for a personal loan, as well as what interest rate you receive. If you have a less than stellar credit score, you may not get approved.

Using a personal loan calculator can help you determine if this strategy will net you savings and, if so, how much.

💡 Quick Tip: Credit card interest rates average 20%-25%, versus 12% for a personal loan. And with loan repayment terms of 2 to 7 years, you’ll pay down your debt faster. With a SoFi personal loan for credit card debt, who needs credit card rate caps?

The Takeaway

Paying down $10,000 in debt might not be easy, but with the right strategies, it is possible. This could mean adopting an aggressive payoff method or looking for additional options to pay down the debt, such as personal loans.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

How do I get out of credit card debt with high interest?

You have options when it comes to paying off high-interest credit card debt. One to consider is the avalanche method, which involves paying off the card with the highest interest rate first while making minimum payments on other cards. Then, move on to the debt with the next-highest interest rate, and continue the process until you have no more balances.

Should I seek credit card forgiveness?

Credit card forgiveness isn’t common. That said, you may be able to negotiate with your creditor to reduce the amount you owe, which could help relieve some of your debt burden.

How long will it take to pay off $10k in credit card debt?

The length of time it will take you to pay off $10,000 in credit card debt depends largely on the amount of your monthly payment and your card’s annual percentage rate (APR). Consider this example: If you have an APR of 21.95%, and make monthly payments of $500, it will take you 26 months to pay off the debt. If you can swing a larger monthly payment of $1,000, it would take you 12 months.

Photo credit: iStock/ArtistGNDphotography

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SOPL-Q326-040

Trade schools (also known as vocational schools or technical or career colleges) offer hands-on training and education to prepare students for a specialized career in fields such as carpentry, computer information systems, cosmetology, and welding. Most trade school programs range from less than one year to two years, and students graduate with a diploma, certificate, or associate degree.

While trade schools are typically more affordable than four-year colleges and universities, the cost can still add up. The annual cost of most trade school programs ranges from approximately $4,000 to $17,000, according to the latest data. Many trade school graduates take out student loans to help cover the expense.

Fortunately, there are ways to help reduce trade school student loan debt, including payment plans and trade school debt forgiveness options.

Understanding Trade School Debt

If you went to trade school for the chance to get a high-paying vocational job, you may have student loan debt to repay.

The average debt for students who attend trade school is approximately $10,000, according to one estimate. By comparison, the average federal student loan debt is $40,467 per borrower, according to the Education Data Initiative.

Borrowers can use private and federal student loans to help pay for trade school. If your trade school program is accredited, you may be eligible for federal loans. To apply, complete the Free Application for Federal Student Aid (FAFSA).

You can also take out private student loans for trade school. You’ll need to undergo a credit check in order to be approved. Unless you have strong credit, you may need a cosigner for the loan.

Are Trade School Loans Eligible for Forgiveness?

Students who take out qualifying federal loans may qualify for student loan forgiveness. Typically, you must make a certain number of payments under a qualifying repayment plan for a specific period of time, and then the remainder of your student loan balance is canceled.

Most private student loans don’t offer forgiveness.

Federal Loan Forgiveness Programs for Trade Schools

There are several federal student loan forgiveness programs borrowers may qualify for, depending on their situation.

Public Service Loan Forgiveness (PSLF)

Trade school graduates who are employed by a government agency or a qualifying nonprofit organization may be eligible for Public Service Loan Forgiveness. To qualify, borrowers must be employed full-time and have qualifying federal Direct Loans.

While working for an eligible employer, borrowers must also enroll in an income-driven repayment (IDR) plan or the Standard Repayment Plan. After they have made 120 qualifying payments, any remaining Direct Loan balance they have is forgiven.

In March 2025, President Trump signed an executive order to limit eligibility for PSLF and requested an update to the program’s regulations. The executive order is being reviewed, and the PSLF program remains unchanged for now, according to the Federal Student Aid website.

Income-Driven Repayment (IDR) Forgiveness

Income-driven repayment plans base a borrower’s monthly payments on their discretionary income and family size, typically resulting in lower monthly payments. Borrowers must update their income and family size yearly (a process called recertification). By the end of the repayment period, which is 20, 25, or 30 years, the remaining loan balance is forgiven.

The IDR plans are:

•   Repayment Assistance Program (RAP): With RAP, you pay 1%-10% of your adjusted gross income (AGI) divided by 12, with a $50 reduction for each dependent, over 30 years. This is the only IDR plan available to borrowers with loans disbursed on or after July 1, 2026.

•   Pay As You Earn (PAYE): Payments are set at 10% of a borrower’s discretionary income (but never more than the borrower would pay on the 10-year Standard Repayment Plan) over 20 years. This plan is set to be eliminated by July 1, 2028.

•   Income-Contingent Repayment (ICR) Plan: ICR calculates payments at 20% of a borrower’s discretionary income or the amount they would pay on a repayment plan with a fixed payment over 12 years, whichever is less. The repayment term is 25 years. Like the PAYE plan, this plan is set to be eliminated by July 1, 2028.

•   Income-Based Repayment (IBR): Payments for loans borrowed after July 1, 2014, are 10% of discretionary income over 20 years. For older loans, payments are 15% of discretionary income for 25 years. Borrowers with loans disbursed after July 1, 2026, cannot apply for this plan.

•   Saving on a Valuable Education (SAVE): As of March 2026, the SAVE plan has officially ended. From July 1, 2026, servicers will be contacting borrowers on the SAVE plan to give them 90 days to select a new repayment plan and resume payments toward forgiveness.

Borrower Defense to Repayment

If you enrolled in a trade school based on misleading information from the school, or you were the victim of other types of misconduct by the institution, you can apply to have your federal loans forgiven under a process known as borrower defense loan discharge.

If your borrower defense application is approved, a discharge means you will no longer have to repay your federal student loans. In some cases, you may also see reimbursement for federal loans you’ve paid up to now, including interest on the loans.

You can submit a borrower defense loan discharge application on the Federal Student Aid website. It’s important to note that in 2023, a federal court delayed the effective date of the latest regulation for borrower defense. No applications can be processed under that regulation unless the injunction is lifted. However, you can still currently apply for borrower defense.

Closed School Discharge

If you were unable to complete your program or degree because the trade school you were attending closed or if the school closed within 180 days after you withdrew, you may be eligible for a closed school discharge of your federal student loans. That means you will no longer be obligated to repay the loans. Contact your loan servicer for the application to get your loan discharged.

Alternative Ways to Reduce Trade School Debt

If you don’t qualify for trade school debt forgiveness or a loan discharge, there are a number of other ways to help lower your loan payments.

Refinancing and Loan Consolidation Options

Student loan refinancing involves paying off your existing loans with a new loan from a private lender. Ideally, the new loan will have a lower interest rate, which could lower your monthly payments, or better loan terms. You can refinance both private and federal student loans. You may pay more interest over the life of the loan if you refinance with an extended term.

There are different types of refinancing borrowers might want to explore, including a Parent PLUS refinance if you took out loans for your child’s education.

Just be aware that refinancing federal student loans makes them ineligible for federal benefits such as income-driven repayment plans. Make sure you won’t need access to these federal programs before you move forward with refinancing.

Another option is loan consolidation. A Direct Consolidation Loan allows you to combine federal loans into one new loan to simplify your payments, potentially lower your monthly payment amount, and gain access to IDR plans and federal forgiveness programs.

However, with consolidation you may have a longer repayment period, pay more in interest, and lose access to some loan cancellation options.

Employer-Sponsored Loan Repayment Assistance

Some employers offer a benefit called loan repayment assistance, in which they help employees repay their student loans. The terms of these programs vary depending on the employer, but in general, an employer might establish a maximum amount they will contribute, and the employee may have to work for the company for a specific period of time to be eligible. Check with your benefits or HR department to find out if your employer offers loan repayment assistance.

Grants and Scholarships for Loan Repayment

There are private grants and scholarships that can help you pay off your student loans. These programs may be based on need, merit, or a combination of both. You can search for private grants and scholarships on online platforms such as Fastweb and FinAid.

You can also reach out to professional organizations you are affiliated with and companies you have a connection with to find out if they offer grants or scholarships for loan repayment.

State-Based Loan Forgiveness Programs

Most states offer student loan forgiveness programs for residents. Many of these programs are aimed at borrowers working in public service fields, such as health care, teaching, and law, and require specific service commitments. Borrowers must typically meet a set of criteria to have student loan debt forgiven.

To find loan forgiveness programs in your state, search your state government website.

How to Apply for Trade School Loan Forgiveness

The rules and criteria for applying for trade school loan forgiveness vary by program. In general, you can go to the relevant website and fill out and submit an application online.

But first, read about the program and make sure you meet the eligibility criteria. If you do, gather the appropriate documentation. Typically, you’ll need to provide proof of employment, loan statements, and payment history. Then, fill out the application as directed and upload any required documentation. Be sure to continue making payments on your student loans in the meantime as your application is being reviewed.

The Takeaway

If you’re dealing with trade school student loan debt, it is possible to get loan forgiveness. You may be eligible for options such as Public Service Loan Forgiveness, state-based forgiveness programs, and employer-sponsored loan assistance.

You can also explore private grants and scholarships to help pay off your student loans, as well as loan consolidation and student loan refinancing. Consider different options to see which one is the best choice for your situation.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

What types of loans can be forgiven for trade schools?

Most federal Direct Loans qualify for both Public Service Loan Forgiveness and forgiveness under income-driven repayment (IDR) plans. In order to be eligible for forgiveness via these programs, trade school borrowers need to meet certain other qualifying criteria. In addition, most states have state-based loan forgiveness programs that may forgive both private and federal loans, and some employers also offer loan repayment assistance as an employee benefit.

Do trade school graduates qualify for PSLF?

Trade school graduates may qualify for Public Service Loan Forgiveness (PSLF) if they work full-time in public service for the government or a qualifying nonprofit organization and have qualifying federal Direct Loans. They must also make 120 qualifying payments under an income-driven repayment plan or the Standard Repayment Plan.

What happens if my trade school closes?

If your trade school closes and you were unable to complete your program, or if it closes within 180 days after you withdrew from school, you may qualify for a closed school discharge, which means you are no longer obligated to repay your loans. Contact your loan servicer for the application. They can also walk you through the process of getting your loan discharged.

Can private trade school loans be forgiven?

Generally, private trade school loans are not eligible for forgiveness. Private lenders rarely offer forgiveness, except, sometimes, in extreme circumstances, such as if the borrower becomes completely and permanently disabled or dies. However, private loans may qualify for state-based forgiveness programs, employer-sponsored loan repayment assistance, or private scholarships or grants that help with loan repayment, so it’s worth doing some research to see what options are available for your situation.

What are the best alternatives to loan forgiveness for trade school debt?

Alternatives to forgiveness for trade school debt include employer-sponsored loan repayment assistance, if your employer offers it, or private scholarships and grants that help you pay off student loan debt. You can also explore options that could help you manage your payments and potentially even lower them, such as loan consolidation and student loan refinancing.

photo credit: iStock/sturti

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