A big reason why I decided to start The Beautiful Useful Project was to make money by selling my stuff in order to pay off my student loan. While I don’t regret going to graduate school, I do regret the way I’ve handled my student loan so far.
My Student Loan Debt Mistakes
- Consolidating too early. My interest rate is 5.35 percent. While this might sound like a pretty good deal today, the loan rates were way lower at one point. I consolidated quickly after graduating in 2001 (yes, that’s more than 10 years ago…), and I thought I was being smart by locking in the lower rate. Little did I know the rate would go down, but I’d be stuck with my higher rate.
- Paying the minimum. I consolidated my loans, and then signed up for a Graduated Repayment plan. My payments were lower, and I was happy, so I just set up automatic payments and tried to pretend like my loan wasn’t there.
- Hoping for loan forgiveness. This was so dumb. I worked as a teacher, but not in a low-income or high-needs school. I thought that eventually all teachers would have the opportunity to apply for loan forgiveness. I really thought that my loans would probably go away.
- Not putting extra money towards my loans. I could have been putting birthday money, surprise windfalls, and other money toward my loan this whole time. But I didn’t. Okay, maybe I did it once, but I’m not totally sure about that…
Because of my completely idiotic student-loan-repayment behavior, I’ve been paying a lot of interest on my loan since 2001, but I’ve not made much progress in actually paying it off. I still owe about $37,000 on a loan that was originally about $45,000.
As my teacher friends would say, I’ve made some poor choices.
I need to clean up my act.
Here are some things I’m doing to change my behavior:
- Each month, I will pay at least double of what my regular student loan payment would have been if I hadn’t gone on the Graduated Repayment plan.
- I will continue to have my graduated payment auto-debited from my bank account each month, because doing so makes my interest rate a little bit lower.
- I will pay the remainder of the “regular” payment in weekly increments. My loan doesn’t have any penalties for paying early or making extra payments. I think this might also lower the total amount of interest paid.
- Any windfalls or extra money will go towards the student loan. So as soon as I sell something, or make money doing something, I will deposit it in my account and immediately make another payment toward the loan.
- I will acknowledge my student loan. A big part of my issue has been denial. The student loan isn’t going away unless I make it go away by paying it off.
- I will try ever-so-hard to maintain my determination. I’ll be on the lookout for stories of paying off debt, and even searching for new student loan payoff strategies.
Is anyone else out there paying off their student loan too? How’s it going?
Check out these Student Loan Paydown Ideas.
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My son is about to leave for college. We’ve done a lot of leg work on this issue and you know what makes me maddest about it? That someone will LET YOU get yourself into this kind of crappy situation, and they have no shame about it! This is how our economy got in the situation it’s in now…by making ridiculous loans to people who do not have sufficient means to repay them. You’re an honorable gal, I’ll give you that. Most “kids” just don’t pay. Don’t even try. Good for you.
Thanks, Melissa!
Have you looked into PSLF (Public Service Loan Forgiveness)? I am in my first year of teaching, just out of grad school and I jumped on this as quickly as I could. Its a federal program that is very easy to sign up for, and you are automatically placed on an income-based payment plan. You have to consolidate your loans, pay 120 consecutive payments, and work in public service for 10 consecutive years… after that, your loans are forgiven completely! No strings.
Hi Alexz! I did look into it, but my school didn’t qualify. It would have been nice, as I did teach for 10 consecutive years. Thanks for leaving the comment – maybe it will help someone else!
Even if you don’t qualify for PSLF, you could still qualify for forgiveness. You go into an income based plan and then (if you don’t work for the government or a non-profit) then after 25 years, any remaining balance will be paid off (because your lower payments won’t get rid of the entire debt obviously) including any interest.
Who knows if they will keep this option available in the future, but anyone who enters it now will continue to qualify for it.
Just another option.
I believe PSLF is for *any* public service job–if you teach in a public school and make 120 on-time payments, they forgive the remainder. You just fill out a pretty simple form proving that you worked in public service (ANY nonprofit counts) for the time when you were making the payments. PSLF is different than Teacher Loan Forgiveness. TFL *does* require certain subjects/geographic locations. Check into PSLF!
Thanks so much for this post! I am about to graduate and I have been looking at all kinds of blogs and articles about paying back student loans and this one is by far the most helpful and the most honest. Good luck with maintaining your goals and thanks again!
Really excellent article. I teach personal finance and have added this to the Webliography in my on line class room.
Student loans are a freight train most graduates don’t see coming.
Thanks, Marsha
Just made my first payment yesterday and signed up for Direct Debit to start as soon as my grace period ends. I aim to pay off my debt in five years and I could not agree with you more, esp. point #5- “I will acknowledge my loans.”
This is me too! I totally feel your pain. Any time I think about money, I think about paying off my student loans 🙁
You’re not alone. I too had taken a loan out and had to repay but I’m working on accelerating this option now. I hope in these 2 years I can clean up my account. This has been a crazy ride! My loan had been outstanding since 2007, I already paid $10K towards my debt. I am currently temping but I do hope I’ll land a permanent role at a good company where I can thrive in. Best wishes on both of us attacking the loans.
Also, they say that if you pay the loan for 20 years the loan will be forgiven but you also need to pay taxes on that forgiven loan so I’m unsure if that’s a good option.
My son also made the mistake to consolidate all of his loans and ended up paying a higher interest rate 5.3%. Some of his loans were 3.2 but Sallie Mae has an all or nothIng policy. He will be paying them back for the next 20 years 😭
I can relate to most of this. I am trying to feel more empowered in paying them down. It IS possible with the right amount of creativity and determination. I’m living with my parents for what looks like the next two years to make a huge dent in them. Sacrifices that will be worth it in the “near” future! Watching the numbers sit at about the same spot for years is what finally woke me up!
Look into Finacial Peace by Dave Ramsey! It is an amazing program to get out of debt!