The Consumer Financial Protection Bureau (CFPB) does not provide a specific percentage of gross salary that should be allocated for student loan payments. However, the CFPB recommends that borrowers should aim to keep their total student loan debt below what they can expect to earn in their first year out of college. This is commonly referred to as the "1x rule" or "debt-to-income ratio."
The idea behind the 1x rule is that if a borrower's total student loan debt is less than or equal to their expected first-year salary, they will be able to make their monthly payments without difficulty and avoid delinquency or default.
For example, if a borrower expects to earn $50,000 in their first year out of college, they should aim to keep their total student loan debt below $50,000. If they have more debt than this, they may struggle to make their payments and could be at risk of delinquency or default.
It's important to note that the 1x rule is a guideline and may not be appropriate for every borrower. Some borrowers may be able to comfortably make higher monthly payments, while others may need to allocate a larger percentage of their income to cover their expenses. It's important for borrowers to carefully consider their individual financial situation and choose a repayment plan that works for them.
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