How I beat my student loan debt / the 100K chronicles

In lieu of the current debates, policies, and media attention focusing on student loan debt in our country I felt compelled share my experience with debt.  For the past few months I’ve been hearing NPR stories on the bills that both freshly graduated students and seasoned alumni are facing post graduation, when the comforts and safety of the college campus bubble finally pops and the reality of the first student loan payment kicks in.  Yes, there is a six-month waiting period after you finalize your grades and grab your diploma where you can plan out (and hopefully get employed) just how you are going to manage that seemingly large bill.  This is probably the largest IOU you have ever encountered up to this point in life.  I spent that six months wondering from time to time just how much per month I was going to be asked to cough up while at the same time feeling out the experience of becoming a real world adult with real world responsibilities at the ripe young age of 23.  It was an odd time in life with a balance of now having to wake up before 6 every morning because your livelihood depends on it while still holding on to the college social life scene that helped define and shape who you are and who you’ve become for the past 4-5 years.

"My first loan payment is coming up next month" "You're screwed"

But I remember that day in early June when that first white envelope came in the mail and the reality of all those digitally signed loans that I used to pay tuition, rent, books, food, travel/study abroad (I don’t regret that part), and for any other financial surprises started to set in.  Don’t get me wrong, there were plenty of times where I could have toughed it out or done without the cash, but the system that was there was just too easy.  All I had to do was fill out an online form, send it in, and presto! Two weeks later I had cash in my school account, at an interest rate that was hovering around 10% (my newfound understanding of percentage rates tells me this was not a good rate).   The growing weight of my debt and ever increasing interest rates seemed almost laughable while I was still in school, like it is sort of a fictional character that you feel will disappear eventually allowing the story end on a pleasant note.  But that character is actually sitting there and lurking, waiting for the opportune moment to step back into the light and make the story more interesting and less fun.

I was fortunate enough to land a job closely related to my field of study (B.S. in Geology) pretty much a month after I graduated. A staffing firm that found my resume online and set up with an interview within a few days.  Before I knew it I was on the payroll for a small geotechnical consulting firm and making almost 16$ an hour. Hot dog!   This kind of work is not for everyone and is about 95% outdoors all year-round in New England (think negative winter wind chills and sweltering 100+ degree dog days of summer outside, all day).  Working nearly 12 hours a day 6 days a week, I was making more money than I ever had before and felt like I owned the world.  So when the first bill came in and I saw what the minimum payment was ($575 a month) and compared it to what was going towards the actual principal balance (about $40) I became confused as to why on earth anyone would make just a minimum payment on a loan . . . besides the obvious reason of not having enough money to do otherwise.  Paying the monster down by their method would take me 30 years, and would just about double what I originally borrowed, even after consolidation!

You mean I have to pay that back?

So right then and there I made an austere financial pact with myself and proclaimed that I will put as much money as humanly possible at this beast every month while still maintaining my personal and social happiness to the best of my abilities.  I started off with a first payment of around $1500.00, and tried my best to make it $2000.00 a month from there on out.  Any extra overtime I received, anytime I got a raise or even a Christmas bonus it usually went right to the loan.  I ballooned the hell out of my payments, as I saw the trap that loan lenders thrive on for people who can’t pay more than the minimum.   When my accountant (I hate doing taxes) saw what I was doing she was shocked.  She asked how I was managing to live after doing the numbers.  My only reply was “Pretty well actually”.  I was working my ass off, but it didn’t seem like life was bad at all.

It’s about prioritizing wants versus needs on a budget.  Sure, I didn’t go out on the town as much as I would have liked (living in Boston made this tricky) I didn’t travel as much as I could have (one of my only regrets), and I didn’t buy unnecessary luxuries for living.  I didn’t have a flat screen TV, a new car, or the latest and greatest digital toys.  I did eat well, and learned how to cook well.  I did buy new things when I needed them.  I did go out socially, usually by sneaking a flask into a bar (saves thousands, but don’t stiff the bartender on tips for sodas). I always lived with roommates instead of going on my own and paying twice the price in rent.  I made myself meals routinely 3 times a day (pack a lunch, save a bunch).  I made coffee instead of buying it on the way to work.  I kept the thermostat at 62 in the winter and wore extra clothes instead.  When times are tough, even if you are making them tough, adaptation is the best tried-and-true method to keep going.   After 4.5 years I paid back roughly 100K with loans and interest while putting away about 25K (half of which the stock market decided it needed more than I did) and investing elsewhere too. There are a hundred ways you can cut back on every day costs that can go directly into your savings or (in my case) towards debts.  For example, I currently rent my place out on the weekends just to pocket extra dough.  Opportunities are out there. You just have to be willing and able to find them.

I still partied

I do realize that I was fortunate enough to land a great job as a consultant and had great perks that made this seemingly nutty goal possible (salary + hours for anything over 40, gas mileage, Per Diem for jobs away from home).  For graduates of today finding a job is turning into a fiasco that I would not want to be a part of.  It’s a different world today than it was 4.5 years ago and I hear the nightmares of 1-2 year job hunts that would wither me down to my wits ends if I was in their shoes, I’m certain.  The rates at which these private lenders (ahem, Sallie Mae) are loaning out money are appalling.  It is almost a comparable to putting it all on plastic instead.  Private lending should is an untamed area that I think should have some sort of cap or regulations.  I do realize that goes against capitalism and the free market system but goddamn the system is lob sided for the borrower.  I feel we are kind of being sold on the idea that college is the only way to make a suitable living and it kind of perpetuates this process.  Don’t take this last sentence as patronizing pontification; college opened the doors for me that I would have never been able to even stand in front of without my degree.  That is the whole idea behind it.  The feasibility of it got lost along the way somewhere.

Future high school in the making

I also believe that more information should be considered and discussed through the financial aid offices at your institution.  I vaguely remember going into the financial aid office during my first days at college and being explained the award that I had been offered. 50 thousand dollars seemed like a hell of a lot of money that a school was betting on me to succeed.  I then learned that 50K was the total award (at 38-44K yearly tuition with room and board from start to finish) and that the rest was on me.  I also did not fully understand that I would be charged interest from the date the loan was signed.  I looked at my first bill in horror realizing I had compounded 11K in interest already before I even knew I had the chance to send in money.  Again, it was probably all in the fine print but as an 18 year old trying to figure out a whole new world away from the comforts of home it was a misleading and somewhat desensitized process of giving a young adult keys to the debt candy shop.

My best advice is to throw as much money as comfortably possible at these loans while you are young and not tied into more complex fiscal situations. Take it on the chin, so to speak, before you are responsible for more than just yourself, your house, car, etc.  With outstanding student loan debt nearly breaching 1 Trillion dollars (I can’t even count that high) surpassing total US credit card debt (holy smokes) I believe that there should be a change in the system.  I wish I had a solution other than lower the cost, which we all know is not going to happen. The cost of college has been ballooning at an insane rate (up 437% from 1982 to 2008) and it doesn’t seem plausible to keep this up.  Young Americans today are considering the cost of college versus the debt they will accrue (coupled with the forecasted salary they receive after graduating) and for the first time seeing it might not pay off.  I am certain I want to further my education with an advanced degree but am very hesitant for these reasons and the pangs of close memories of my repayment process.  Something is wrong here.

Ugly chart

39 thoughts on “How I beat my student loan debt / the 100K chronicles

  1. Well done. I’m an Indian student who was in the same scenario – though cost of education is lesser here in India, I had to take a huge loan to support my education as i’m not from a rich family. I pretty much stuck to living on bare minimum (stayed with parents, didn’t buy new clothes for 3 years, no party culture here, became a vegetarian, gave up alcohol, walked any distance upto 5 km etc.) and guess what, not only I repaid my loan, I also became more healthy and cheerful :) :) where there is a will, there is a way I guess.

  2. Well after reading this I’m glad it can be done. The sacrifices that one needs to make though can be pretty tremendous. How can I, 28 years old, have been out of school for 4 years, making $30k a year (as a banker, with a BS in Aviation) pay back $100k I still owe in student loan debt. My monthly take home is around $1900 and my student loan bills are near $900 which most goes to interest. Now, I have held 2 or 3 jobs at a time just to get by before but it gets overwhelming at times and seeing the debt not go down is depressing. My total monthly bills are right around $1700 leaving me $200 just for whatever. With gas prices what they are and groceries costing more and more, it seems like a never ending battle. I admire what you have done, but how did you make that committment? I feel like I will be paying this off when I retire, and that is not a good feeling. I feel the banks have already made a fortune off me, stop gouging me wtih interest. I want to have a family and own a home someday. Please, any advice would be appreciated. I am willing to make sacrifices, just need some guidance.

    • Hi Tony,

      You are in a tough spot but every problem has a solution. My advise to you is to save as much as you can and try to pay, every month, more than what the interest is. Now, anyone’s income is not going to increase drastically every month so best thing to do is to increase the amount of money you save and divert that into paying off your loan. The key is to prioritize your spending. Here are some pointers, which may help you:

      1.Avoid impulsive shopping, get rid of your credit card(s). Go for a debit card instead, that way you will not spend more than what you have back in your account
      2. Budget shopping, especially when you buy groceries- look for cheaper alternatives or buy things on rotation. Spend for essentials, cut down on things like soda, alcohol, cakes, chocolates etc.
      3. Just because you are saving doesn’t mean you have to let go of what you like – just streamline things, have a pizza night once in a week or twice in a month, that way you will cherish hard earned pizza too :)
      4. Cut down on movie watching at the cinemas, rent out dvds or watch them online
      5. Share accomodation with friends or family, to save on rent
      6. Do 2-3 jobs if you can, try work from home options as well
      7. Keep sharing your experience and talk to your close friends and family when ever you are down, so that they will encourage you to keep going, despite the troubles.
      8. Give yourself time to do something you really like – like music or art or dance or babysitting etc. You can even try to get a part time job in your area of interest. That way, you also get paid for your ‘happy time’. Its important to do something we like on a regular basis to maintain sanity and also to de-stress. That way, making the other sacrifices will not be too daunting.
      9. Have a cheerful, positive and nothing-can-beat-me attitude

      I hope these pointers help you, they have helped me a lot – I have paid off 60% of my student loan in the last 3 yrs and will totally tame the monster by end of 2014. So, you can surely achieve it too. Good luck !

  3. Oh my gosh. This brings me so much encouragement. I graduated in May with about $70,000. I feel the exact same way you do. This blog is so helpful and really brings me peace and eagerness to work hard and pay my debt. I too, wish someone would have sat me down and clearly defined what it would look like to be in my shoes now. How is a 17 year old able to fully understand what private loans, interest rates, salary and all the works looks like for their life when all they’ve heard their whole life is, “go to college, be successful, it’s the right thing to do”. Sometimes, when I think about it too much I think “wow, college really ruined my life”. Then I remind myself that I’m living, my education was wonderful, and it’s a choice I made that I’m going to work hard for.

  4. Pingback: A month from today I’ll be in Mexico « TheAdventuresOfDr

  5. May I ask what type of Loans you took out? Were these all federal or did you have a mix of private/federal? I have a combination (3 private and 1 federal) and although I try my best, I am still on a seemingly 15-year plan (my goal was 8 years). I do live in NYC with roomies, in a borough; I was also fortunate to obtain a job right out of college, but it seems after rent/utilities/food I can barely pay the minimum.

    • I had a bunch of private loans consolidated at almost 10 percent and a federal loan I forgot I had. I was fortunate enough to have the option of working Saturdays and long hours for extra money and I always took advantage of that. It’s hard to put a dent in the principal at first because of the compounded interest on top of the accruing interest but if you pay it down as much as possible quicker they actually drop your interest rate significantly. By the time I about 70% paid off they dropped it down to 3.5%. Living in NYC is hard to do on a budget and probably way harder than Dorchester was. I would bite the bullet and pay off the loan aggressively at first (2 years) to get over the hump on the interest and I bet you will see your rate drop too. Good luck man!

  6. I’m in the same situation to be honest. My parents, god bless em, only make enought to support themselves at home and really don’t contribute much toward my education, leaving me to pay off this monster by myself. I go to a state school, with average tuition 25K per year, which means i’ll be a lil over 100k when I graduate. I am going for a Civil Engineering degree though, so hopefully I could expect to earn 60-70K right outta school if I’m lucky. This really opened my eyes and help relieve alot of stress, as well as take a load off my back knowing I wasn’t alone. I plan on doing a routine very similar to this: Paying as much as possible each month toward these loans, while still leaving enough to live a comfortable/ non-luxorious lifestyle. Thanks for the post, I’m really hoping my situation will turn out just as well.

    • Thanks for stopping by! It’s becoming more challenging for the younger generation of today to make a good investment for their future in academia. I worked in civil engineering Abd was glad to have that experience. See if you can get involved with a consulting firm post graduation because you usually get paid salary plus an hourly rate for billable hours over 40. Keep positive and persistent and you won’t regret it in the long run. The sooner they are gone the better in my opinion.

  7. (this comment might involve a lot of ‘I’,i am just expressing my emotions)Aah!Unfortunately most students forget how the loan system works,as you say it,the sooner you get rid of the load,the better.I am currently trying to pay off my debt too.I live in India and the banks are much more lenient than your country(18 and a 50k student loan!That’s the height of misused capitalism).Anyway,this article is so encouraging man!The focus and determination you showed is amazing!The fact that you scaled-down is what so many find so difficult,for example,i haven’t gone on a holiday for almost a year and i still think this is worth it and temporary.My friends have taken twice the amount of loan and they seem to party all weekend.I guess the strong ones can survive any ordeal.

    • No worries about the over usage of the word “I”! I use it quite often. Thank you for stopping by and commenting. Paying back the debt owed (regardless of how ridiculously expensive academic institutions are becoming, another story) was one of the biggest hurdles I’ve jumped over. I wrote this little commentary to try and put it out into the universe that there are different ways of approaching financial obligations (and maybe better decisions prior to getting into obligatory financial situations). Most things in modern day living are creature comforts and lifestyle choices and money can be easily saved and used differently if you are willing to make sacrifices (like not going on holiday, as you mentioned) and know there is a huge positive gain for at least getting the first 30-40 percent of accrued debt paid off hastily. Stick with it and one day you will have no more weight on your shoulders and it will feel incredibly nice. Good luck!

  8. Hey bro. Great story… I’m an entering Freshman at the University of Tennessee at Knoxville where I will be pursuing a degree in music performance. Now, before you (like everyone) tells me how screwed I am in terms of landing a job, I was meaning to ask do you think there is a way to pay off this debt of mine? My tuition is a whopping 42k a year out of state (It has been my dream to go there) which is insane. Any words of wisdom? :P I’m a 17 year old kid with no IDEA where to go.

    • Where there is a will, there is a way. My best advice is to try and get some sort of serious job while you are going to school, try becoming a waiter at a nice restaurant or something. See if you can pay off some of your loans as they are adding up. At the very least try and tackle the interest. I could have easily paid like 100 or 200 a month while in school to avoid having 10K of interest added up over the course of 4.5 years before I graduated. I wish I had. As far as your career choice, I’m not sure how easy it’s going to be to take care of your debts in music performance. The one thing I can tell you is to follow your heart and the money will follow. Money isn’t everything in this world, as I am learning from my current travels in Latin America. If you are unhappy with your career but make a lot of money a huge part of your life is always going to be unsatisfied. Find your passions and stick with them, my best advice. Good luck buddy!

      Dan

  9. Thank you for this. I lose sleep over my student loan debt and the thought of this finanicial boulder over my head gives me anxiety on a daily basis. I am a teacher and it took me 2 years after receiving my master’s degree to find a full time position (and it’s not even a district job but for head start which is a federal and state funded program). I am however a hard worker and have always held down multiple jobs while going to school full time. Your blog gives me hope that I can pay this off too. With a little sacrifice and determination it can be possible. I am however grateful that I didn’t ecrue any credit card debt,( though I do have a car loan out and my husband and I are in the process of buying our first house). It is a good feeling to know that i am not alone in this and I agree that something needs to be done regarding the cost of education. When your student loan payment is more than your mortgage payment something is wrong.

    • Kristen,

      I’m glad that you are not lost in the burden of the weight of student loans. There is hope, you just have to be frugal and vigilant about monthly payments. Like I said in the post, the first 30-40% is the most important to get out of the way first. After that the interest and payments start to actually make sense and work in your favor. I totally agree about the ballooning cost of college versus the cost of living in this day in age. It’s a difficult decision for the younger generation out there to choose between furthering their education or just entering directly into the work force. But where there is a will, there is a way, and it sounds like you are on the right track. Keep at it and you will one day be glad you chose a more aggressive approach.

  10. i think this is an incredible story, you did beat the loans… not everyone has the luxury of their parents taking care of there college expenses. I can tell you it makes me work harder and always look for ways to increase my income for a better life. At the end of the day, you determine your path in life! 100k plus of student loans for an accounting degree hah

  11. How much would you say you made a year (take home) during that 4.5 years? I’m 24 and want to get serious about paying down my debt. I checked my credit score the other day and saw my total debt was at 101k! i knew it was around there but seeing that number was jarring. I want to get it down to 40 k by the time I’m 30 so that I can live my life! But I also want to move out of my parents home. Do you think I can achieve both f those goals? Or should I spend a couple more years living with my parents to pay off my loans? I want to move out bc my quality of life here is not great socially and I feel like a loser and start my life!haha…what are you’re thoughts?

    • Hi Heather,
      Though i’m in a different country, i am in a situation similar to yours. And yes, tough as it was, I decided to stay at my parents’ place to save on money. That doesn’t mean I have no freedom to do what I want to do, although I have to keep them posted about my whereabouts on an hourly basis ;)
      Anyway the upside is that I have paid off 60% of my study loan in the last 3 years and will be fully done by 2014. So I would suggest you stay with your parents if you share a good rapport with them. Once you are done with your loan, you can move out and then rest of your life, you will be on your own. At that point, you will trust these times spent with your family.
      Good luck!

  12. Thank you. If you can do it I can too. I have about $125 k in student loans. Much went towards medical bills. You just saved me from clicking the withdraw button. My last two semesters. I am gonna kick its ass and finish it out. God bless.

    • Stay with it Aric! With only 2 semesters left, you can’t let go now. There are many easy things you can do to keep your cost of living down, thus giving you more of a leverage to pay down debt in a more aggressive manner. I’ve never looked back and was glad to have paid off the debt I owed in the manner I did. Good luck!

  13. I just wanted to say thanks for the awesome blog. Occasionally I get worried about the amount of debt I am racking up (~75k right now). It’s inspiring to see someone deal with their debt in such a hard core manner. I’m finishing my PhD in Computer Science in a couple years and I hope I am able to be as aggressive as you were in paying off the debt. Thanks for the inspiration! =D

    • It’s a hard road to climb but the efforts are totally worth the payout in the end. A good friend of mine got inspired from my persistent onslaught of counting pennies and is taking the same attitude towards his. It is entirely possible, it just takes a lot of personal commitment. The first part of the hill is the hardest to climb, and eventually the interest slows down after you make a sizable dent. It get’s easier, just keep it up! Thanks for stopping in!

  14. Congrats. I am racking up over 60k in loans so far with 1.5 years to go in my “useless” degree. I am disabled and may get part of it forgiven. People have told me I’m screwed. But reading your blog, there is a glimmer of hope? I have to admit, the idea of paying off all my debt has made me contemplate suicide many times. Sorry if I sound like a downer… :( But thanks for this blog, it’s going in my “Inspirations” folder. :)

  15. As someone extremely frightened about the prospect of law school debt, even though the school I’m going to is well regarded, your posts have given me a little hope. For another decade, life will probably be tough (if I even get a job) but I will do my damndest to avoid wallowing in debt, even if it means living in my car.

    • Don’t worry, money is a game. And if you go to law school, I’m pretty sure you can figure out a way to play it right. Get your broker’s license, play with real estate, you’ll be alright!

  16. Again, I want to thank you for laying this out. I remember reading this about a year and a half ago– thinking, “I am never going to be able to do this!” I finished my credentials in December and landed a job teaching at a public school! So, starting August I am expecting a steady income surpassing the amount I received at Starbucks, haha. I am excited and determined to prove that I can do this. It will be interesting to see the changes. I’m curious about the best way to pay extra and make sure that it goes straight toward principal, rather than interest.

    • It’s such a beautiful feeling knowing that a journey of mine can be inspirational to others, and that strangers I’ve never met before are using something I did as a model for what they can achieve as well. It makes me very happy to know that I can have that kind of influence out there, and I’m glad that you wrote in to tell me about your experience and journey as well. Keep at those loans, they are totally possible to overcome and get out of the way! I’ve never looked back since I sent in that final payment, and I’m grateful that I stuck with the idea.

      As far as paying extra to go towards the principal balance, that is EXACTLY what happens when you make a payment larger than what they are asking for in the monthly statements after the interest is paid down. Anything extra you pay on top of the payment gets applied at first to the interest that has accrued (my 1st year I paid off approximately 11,500 in accrued interest alone!!! but this is also a tax write off too) and once the interest is all paid down then it starts rolling off the principal, which is what the ultimate goal is (get rid off interest so that you’re monthly payments are actually taking your debt down). Good luck out there, and if you have any more questions I can maybe provide some tips?

  17. This story is so inspiring, I’ll be graduating with my MBA this up and coming May and I’ll also be apart of this 100k student loan club, I’m looking for at least two jobs now, since I already know what to expect. I’ve read this article a few months back and every time I feel myself becoming overwhelmed with just the thought of this debt, I just have to revisit this article!

  18. Finally! a real story that is worth the read! I got sick and tired of stories were students are complaining and in distress all the time. It is really nice to see someone tackle debt, that larger, in under 5 years. I am excited about the possibility!!! Congratulations on paying off your debt.

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