Consider terracing! You don't have to do anything fancy. Just laying landscaping timbers or railroad ties across the grade of the slope will help to catch the erosion.

can't really do the terracing - the slope is a 25% grade and I'm not able to do lots of digging to set the timbers, and can't afford to have it done. :(

We've looked into planting low ground covers, but there's about 1000 sq ft, way too much to spend.

You don't have to do lots of digging. For quick and dirty terracing, get the railroad ties and get rebar. Pound the rebar into the ground on the downhill side of the ties, and they will hold the ties in place. Erosion will gradually wash soil up against the ties, creating the terrace. Or you can dump dirt against the ties yourself.