So in the past three years, I have been single mindedly living for the purpose of beating my student loans and beating the student loan companies. I have hardly scratched the surface of the quite confusing industry of student loans, but I am certain of one thing – student loan companies do not want you to pay off your student loans.
According to debt.org, the national student loan debt has hit $1.2 trillion dollars and growing. That’s about $33,000 per student. When I graduated in 2010, I had taken out $121,000 (far more than my fair share). But when my curiosity peaked in 2013, it had grown to $143,000.
$20,000 added to my principal because of interest. Student loan interest is capitalized to the principal. The kind of interest that means while you are reading this, the student loan company is charging you.
This is it! I thought. Since the conventional way of paying off debt isn’t working for me, I have
The only way to pay down student loan debt is to get ahead of it. Which, I get it, it’s easier said than done. But following my own advice allowed me to pay more than $60,000 in the last 3 years towards the principal, and I didn’t have to sacrifice myself or happiness to do it. In fact, I became more satisfied with life because of my determination in my goal.
Here’s how anyone can get ahead of their debt:
1. There’s no such thing as “extra money.” It was easy for me to stumble into what I thought of as “extra money” like getting a free coffee or saving 50% off a sweater and spending that earmarked money somewhere else. But instead of putting that money into, say, supersizing a meal, or getting the venti coffee, I put it towards my loan. This may seem little, but remember, student loans go up EVERY DAY because of compound interest. This way, I kept everything at bay.
Also, money that I looked forward to every year like work bonuses or tax returns went straight the loans. It was easier to take chunks off the mountain of debt making periodic big payments rather than monthly minimum payments.
2. IBRs can work if you use them correctly. Income based Repayment plans (IBRs) are put in place by the federal government to give students the chance to pay their debt even when they aren’t making much money. I don’t like IBRs because it’s easy to look only at your minimum or absent monthly payment than what the principal is growing to be. But I put my loans on IBRs so I can concentrate on my different loans one at a time. I can put more money towards the principal of the highest interest loan or pay off a lower principal loan faster than if I was equally paying the minimum across the board. I started with 16 loans (from 3 companies). Now, I have to concentrate on 9.
3. Changing jobs helped significantly. When I started my war against the loans, I was making $10/hour as a legal assistant. As a graduate with a masters, I realized I wasn’t getting paid what I was worth. This started another life changing journey of what I was supposed to do with my life. Luckily, I fell into finance after just a year of searching. This increased my income significantly to the point of making higher payments to my loans.
The journey of student loan repayment can be a long one, but it is absolutely doable. Keeping in mind that student loan companies want me to fail fuels the fire in me to pay them off fast. The $80,000 that I still have left will be paid off in less than 3 years.
The national student loan debt is not going to end overnight, but with dedicated repayers, perhaps student loan companies and government officials will realize that Americans hate living in debt.
I refuse to give the student loan companies more money if I can help it. Paying abundantly is the only way to hit them where it hurts.