student loan debt

Take Charge of Your Student Loan Debt

It is 2017 and I have been out of grad school just over 6 years.  Now, I am getting excited about another milestone… paying off my student loans!  I took out about $78,000 in student loans for physical therapy school.  It is a three-year full-time doctorate program, which included summer internships, so there were very few opportunities to work while in school.  At the conclusion of physical therapy school, I was up to my eyeballs in student loan debt. I am sure I am not alone in this.  Higher education is expensive and more career paths are demanding certain degrees.  How do you recover from this mountain of debt, so fresh in a new career?  I will share my personal journey and hopefully give you some ideas along the way!


As many of you know, there is a few month grace period from graduation until that first loan payment is due.  If you can afford to start paying immediately, do it.  That will mean less interest is accumulating.  But, if you are like most recent grads you have a few things to take care of before that first paycheck is headed your way. The first thing is to get a job!  You may need to pass a test, like the boards for physical therapy or the bar exam for lawyers, so get to that as soon as it is allowed. But, start interviewing and getting a job lined up for after.  Time is ticking.  Fortunately, I got a job lined up quickly, so I was working full time when that first loan payment came due.  I wasn’t prepared however for the almost $1000 monthly payment for my five student loans! Ouch! Look ahead at what your minimum payments are for each loan, so you can be prepared. I also was not impressed with the 8.5% interest on my grad plus loan. That seemed a bit high to me.  How was I going to get ahead and pay these loans off?  I needed a plan.


The first thing I did was to refinance my graduate plus loan to a lower interest rate.  I was able to get it down to about 3%APR. That helped to lower my minimum monthly payment by almost $70 as well.  I did not extend the repayment period, I wanted these loans gone!  I focused on paying my biggest loan first. It may have been better to pay some of the higher interest loans first, but my focus was trying to reduce my monthly obligation and ease my cash flow a bit.


I took on an extra job teaching at the university and I put every extra penny I could towards that loan.  I am proud to say I lived frugally and was able to pay the biggest loan off in 18 months. It was a huge relief!  That one loan was just over $25k!  It was hard to continue to live that frugally, especially since I had been pinch pennies through grad school and just wanted to enjoy my income. However, I can say paying that first loan off felt amazing!  For me, it was worth the penny-pinching. I was determined to keep paying those loans off fast.


At this point, almost 6 years into my repayments, I am down to 2 loans with a total of $12,000 left to pay off.  My goal is to have them gone by the end of 2017.  I hope even sooner!  I have done many things over the past 6 years that have helped with this process. I want to share these ideas with you, so you can also get rid of your student loans, or really any debt!


Earn More Money


The first way to get student loans paid off is to pay more each month.  The easiest way to do that is to earn more money.  Maybe you can work a part-time job in addition to your new job.  You could house sit, dog sit, or babysit for more money. You could even try blogging or freelance writing. It takes time and hard work, but it is possible to earn money online. Every little bit helps.  All the extra money you can send helps to pay down the principle and decreases the interest you are paying in the long run.


Live Frugally


Live like you are still in college!  You have lived like a pauper for years, what is a little longer?  Maybe you allow yourself a few new luxuries, but delaying the lux life now will save you thousands in interest.  Maybe you can hold off on that new car, or maybe living with a roommate for another year isn’t that bad.  Consider what you can live with and keep your living expenses low.  I’m not recommending a Ramen noodle diet, but keeping that frugal mentality a little longer can pay off!


Consider moving in with parents, grandparents, or others to reduce or eliminate your housing bills.  I know it’s not fun, or glamorous, but housing is expensive and not having a huge housing budget can free up a lot of funds. Imagine how much less debt you would have if you lived rent free for 2 years?  Just a thought.


Some things I have done to reduce my expenses and increase my payments are cooking at home, not purchasing a new car, not buying a new house, and I have taken fewer vacations. I also took in a roommate for about 7 months.  None of these have been fun, but the reward of eliminating my student loan payment is worth the sacrifice!


Consider Refinancing


There are some good refinancing options out there.  Consider the APR, loan repayment period, new monthly payment amount, and any repayment penalties if you pay ahead.  Also if you refinance the loans the tax deduction on your interest paid will likely go away.  That should not be a reason to not refinance, just another consideration.  Refinancing is a good idea if your monthly payment is higher than you can afford or like me you have a loan with a very high interest rate.


Employer Payments or Loan Forgiveness


There are programs out there, some federal programs that will forgive part of your student loan debt for service.  These are sometimes available for those in the medical field who agree to work in underserved areas.  Look into them to see if you are eligible.  It is not a bad way to slash that debt.  Generally, they require 2 years of service, so make sure you know what you are agreeing to! But some public sector employers will also assist with loan repayment so look around as you are job hunting.  Especially if your field is in demand.  Here is info on the government forgiveness programs.


I tried many of these options and have managed to pay off $65,000 in 6 years!  Some years I was able to get further ahead than others.  Life sometimes gets in the way, and you just adjust and keep plugging along.  I also worked on my retirement and savings as well.  You don’t want to neglect your future when dealing with your debts. It is a fine balance with limited funds, but you have to consider time as your friend with investments. More on that in another post!


When I send my final payment this year, I will be out of student loan debt 3.5 years earlier than if I had just paid the minimums.  I have saved thousands in interest and I will have a huge weight lifted off my shoulders!  I can’t wait!  I will update this post when that magic moment happens.  Stay tuned!!

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