In the summer of 2018, I quietly announced to my family and close friends that I felt prepared to start repaying my student loan debt in full. My plan was to repay my seven outstanding loans that totaled $55,000 over the course of the next year. Little did I know that I would make my final loan payment on May 1, 2019, paying the loans in full within 10 months instead of 12 months.
It’s no secret that women carry a disproportionate amount of student debt. In the United States, women hold two-thirds of the outstanding student loan debt. I graduated from college in 2010 during an economic recession. My student loan debt, scattered across seven separate loans, each had different balances and varying interest rates. The total balance across all seven loans eventually ballooned to $55,000.
I was a walking case study of everything you could do wrong as a student debt borrower. I deferred my loans and I defaulted on practically every one. There were no refinancing or consolidation opportunities available for me. By 2015, I finally started making consistent minimum monthly payments to the tune of $653 each month. What bothered me was that the $653 I was paying wasn’t really doing much to drop the balance of any one loan. It was the total minimum payments needed to placate all seven loans from defaulting again. Much to my horror that same year, the balance climbed to $56,000 — it wasn’t even holding at $55,000 anymore. My debt was actively growing larger.
Something shifted in my head. The idea that I might grow old with my student debt fell away from me. I started to map out a strategic plan for how I would pay my loans off in full. Here’s how I did it and how you can prepare if your repayments are starting back up again in May.
Choose a Payment Strategy and Stick to It
Four federal loans and three private loans made up my student loan burden. With no refinancing or consolidation options available, I was left with the option of using a debt repayment strategy to pay off my loans.
Generally, there are two commonly used repayment strategies: debt snowball and debt avalanche. As a quick refresher, debt snowball is when you knock out the debt with the smallest balance first and “snowball” your way up to the bigger pieces of debt. Debt avalanche means starting with the highest-interest debt, knocking that one out and then moving on to the next piece of debt with high interest.
Personally, I had concerns about using the snowball method. I worried all those little wins wouldn’t be enough to sustain me as I approached the worst of the debt repayments.
The worst loan I had was, without question, a private loan of $25,000 with an 8.25% interest rate. I later learned this is called sore thumb debt. It’s the outlier with an unusually high balance or interest. In my head, I referred to it as my Mount Everest.
Logistically, it made the most sense for me to use the debt avalanche method to repay my loans. I needed to get to the top of my proverbial Everest and chip it down into nothing. Over the course of 2018 and with much patience, diligence and hard work, I was able to whittle my sore thumb debt down from $25,000 to $18,000. I paid the remaining balance off in 2019.
The avalanche method isn’t for everyone. It doesn’t have the same kind of wins like debt snowball. Some people prefer to use the snowball method and that’s fine. However, if you have a piece of sore thumb debt it is worth considering the avalanche approach. Just remember to keep with it. Debt avalanche might not give you that many quick wins, but it delivers on the steady pace of knowing you are working to get the most difficult, expensive parts of debt cleared in full.
Keep a Low Overhead
I did not give up Starbucks to pay off my student loans. Instead, I never had a car. I walked and used public transit to get to and from work. I always lived with roommates and never on my own.
One of the best pieces of financial advice is to keep your personal overhead expenses low. Getting rid of coffee was a drop in the bucket. If my personal overhead meant no longer buying lattes and avocado toast but keeping all other major expenditures, I’d still be in student loan debt today. The better approach is to reduce or remove entirely at least one, or more, big ticket expense — even just for a year — as you work to repay your loans in full.
Get a Side Hustle(s)
Prior to starting my loan repayments, I had a full-time job and several freelance side writing gigs that allowed me to steadily save and build up a series of financial nest eggs. It’s not exactly a new tip to advise someone paying off significant debt to get another income stream, but I don’t think I could have repaid my loans as quickly as I did or at the speed I did without my side hustles.
Look for side hustles that you can do outside of your work schedule and that do not pose a conflict of interest with your existing job. Your side gig might allow you to explore one of your interests or passions and potentially position you to become an expert in that industry or niche!
Ask For Help
In November 2018, I faced a crossroads in my loan repayment cycle. My loan payments, which for several months had been substantially more than the minimum amount due, were getting flagged with a pop-up screen before I was able to submit the payment.
This pop-up screen addressed the billing direction for the payment with a check yes or no box. The problem was that the wording next to each yes or no box was so convoluted that I had no idea what I was agreeing to if I picked one box over the other. Worse yet, this box only popped up if I typed in a larger payment amount. It wasn’t visible if I was making a minimum payment on my loans. If I couldn’t understand what I was agreeing to, it was going to take me a lot longer to get out of debt.
Undeterred, I sought out help from a financial planner I saw speaking on student loans on CNBC. I reached out on LinkedIn, hopeful the planner could answer my question. He was able to help me out and ensure that the billing for my payments went in the direction where I felt most comfortable.
If you have any questions about your student debt, I would recommend asking a professional for help. A financial advisor, planner or certified student loan professional (CSLP) will be able to answer your questions and offer additional advice.
Maintain a Low Overhead After Repayment
Not a whole lot changed in my life post-student loan debt. It has been almost three years since I made my last payment and I’m still keeping a pretty low financial overhead, all things considered.
When and if possible, I highly recommend keeping a low overhead after you’re out of student debt. Think about the money you would have allocated to that monthly student loan payment. Where can you put it now? Do you need an emergency fund? Start building one. Are you ready to invest? Open a Roth IRA. You never know what might happen next and it’s always better to be prepared for the future ahead!
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