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For many years, Americans have found it hard to understand their student loan balances. With the average person owing close to $39,000, the big numbers are tough to deal with. However, financial experts point to one, much tinier number that cuts through the noise, and it shows if your debt is manageable or way too out of hand.
This number is the percentage of your total monthly income that goes to student loan payments.
The University of South Florida gives this tip: if your payments are between 8 and 10 percent of what you make, you are in a safe spot. Anything more is a worrying sign.
The 8-10 percent rule
Here is what you can do: take what you must pay each month, divide it by what you make each month, and turn it into a percentage.
"If you're paying more than 10 percent, that's a sign your debt could be unmanageable," said a fanancial expert from Investopedia. Everything below 8% usually means a good balance between debt and income.
Massive importance in 2025
These stakes represent a big deal now. Federal student loan groups started demanding the repayments again this year after they stopped during the pandemic crisis, and now, late payments have gone up. Over nine million people are late or not paying, and less than half are up-to-date on their loans repayments.
The effects of falling behind are big: wage garnishment, damaged credit, and even Social Security seizures for older borrowers.
"The risk of default has never been higher," said Betsy Mayotte from the Institute of Student Loan Advisors. "Borrowers need to know exactly where they stand."
When debt goes too far
Experts say that when the loan-to-income ratio hits two digits, it is harder to manage the money. Rent, health care, and even retirement savings get tight.
A borrower in Michigan, who dis not want their name shared, said $600 each month is about 20 percent of what she takes home. "I've postponed buying a house, postponed starting a family," she said. "Everything revolves around the loan payment."
What borrowers should do
If you are already past the 10 percent mark, you still have choices. Plans based on your income can limit payments to a smaller part of what you earn, sometimes even reaching 5 percent. Short breaks and help for a while can give some rest. And adding a bit more money, like $20 a month, can cut down interest in the long run.
Yet, those who give support state that knowing is the first step. "Many borrowers don't realize how bad their debt is until they do the math," Mayotte said. "That percentage tells the story."
The total amount of what you owe might catch your eye, but a more key number is smaller and closer to you: how much of your income it takes each month.
If your payments are more than 10 percent of your earnings, experts say, it is time to do something about it, before student loans take over not just your money, but also your future.