Goodbye, Sallie Mae! Today, my husband and I reached our goal of paying off my $79,000 in student loans in less than a year and a half after graduating from my master’s degree.
My husband and I graduated last May, me with my master’s degree and my husband with his second bachelor’s degree. After our two graduations, when we started our new careers last summer, we came up with a plan to pay off my student loans quickly that worked very well for us. Some close friends have asked us about our story and any advice we have for them as they pay off their student loans. Below are our tips (compiled by both of us) for those in each phase of the college loan financing/repayment process based on our personal experience. We’ll start with those who are currently paying off loans and go back to our advice for those who are still in college and then back to our advice for high school students who are making plans for college.
To recent college grads now paying down debt:
MAKE A PLAN AND STICK TO IT.
We know it’s tempting to jump on the bandwagon and graduate from college feeling like you ‘deserve’ a new car or some other expensive pat on the back as a reward for finishing college. Do not do this! Make a decision to be one of the few people who decide to get out of debt after graduation instead of going deeper into debt. Plus, getting that new car will be so much more enjoyable when you buy it with cash instead of adding to the mountain of debt. Trust us, it’s possible to pay off your student loans soon after graduation if you have a good plan and don’t need to have the income of a rocket scientist or neurosurgeon to do it.
PRETEND THAT PART OF YOUR INCOME DOESN’T EVEN EXIST.
Couples: If you are married, live on only one of your incomes. Literally pretend only one of you is working and use the other person’s income solely to pay off loans. After graduating last year, we created a separate account for each of our direct deposit paychecks from each of our jobs. One of our accounts has both of our debit cards set up (ie the joint account we both use to pay bills and buy things). The entire other account was immediately emptied to the Department of Education each time an employer direct deposit was made. Don’t even let your designated loan payment money go into your debit account so you won’t be tempted to make poor decisions. Don’t even give yourself the option of spending your designated loan money on other things. You’ve been living without a full-time professional salary through college, so there’s no reason you can’t continue to live on less money after graduation—at least long enough for your student loans to go away. THEN, you can reward yourself, AFTER you’ve earned it. Then, once your student loans run out, think about all the things you can do with that second person’s income you’ve gotten used to not using. You can save all those checks now to buy a car outright, make a big down payment on a house, etc.
Single: If you’re single, you obviously can’t put your entire paycheck into loans, but you CAN choose to live economically. Get a roommate, eat at home, skip shopping, and make it your sole mission to get rid of your student loans/debt. Pretending to make less than you really do and budgeting bills with only a portion of your paychecks are still key factors in making this plan work. It’s basically the same concept as our advice for couples (living on only a fraction of what you really earn), just on a smaller scale.
To Current College Students:
LIVE LIKE THE POOR COLLEGE STUDENT YOU ARE.
You’re not rich just because you have a ton of student loan money available at your fingertips. For those of you who are currently college students, learn from our mistakes and get as few loans as possible to survive. It is possible to live without going out to eat every meal and without buying iPads and Christmas presents with student loans or credits. Take the time to educate yourself about money instead of naively signing on the dotted line every year and living off student loans without a second thought. Make good decisions now and you will benefit from them later.
How do we know this?
Tiffany’s story:
I graduated high school valedictorian, had a perfect GPA, got a 31 on my ACT, and basically received a 4-year full tuition waiver scholarship from OSU along with several other individual scholarships. But here’s the kicker: Despite all of this, I still took out almost the maximum amount of student loans each semester for books (well, this part was legit), room and board (also legit), and shopping, eating out every day , etc. (not so smart). And the scariest part is, if you had asked me at one point how many loans I currently had or what the grand total was, I couldn’t have even told you a ballpark number. I was completely clueless. I mean it’s all fake money and free anyway, right? Or at least it seems that way until you graduate and have to start paying it back. After completing my bachelor’s degree in four years, I entered the speech pathology graduate program, bringing my total to six years living on student loans. Okay, time for the happy ending… Now, at 25 and just 1.5 years after graduating, I have ALL $79,000 of my loans paid off, a master’s degree that is fully PAID for, and a rewarding career that I love. I may have over-borrowed, but at least I chose a career with a good job outlook, so I was *able to pay off my loans on time, which brings us to our next piece of advice… .
CHOOSE A PRACTICAL DEGREE.
Probably the best advice we have for today’s college students is to choose a degree program that will earn you a living. Unless you are independently wealthy and money is not an issue, a degree in fashion, music, art, history, or the like is probably not practical. Gone are the days of going to college for the “experience” and the concept that simply having a college degree will help you get a job. Don’t get us wrong, you should still pursue these interests as HOBBIES. But, if you’re taking out loans/debt to pay for a college degree, at least make sure it’s a good investment. Search job prospects for the career of your choice, look up information on salaries, etc. Don’t graduate with thousands of dollars in debt and work in a restaurant because you can’t get a job in a field you love. This is an expensive mistake. Life isn’t all about money, but you don’t want to spend your life struggling with money either. Do your research and choose a career that you enjoy and that also has a good job outlook. Then do hobbies that you also enjoy.
How do we know this?
Eric’s story:
I’m a violinist and I majored in music my first two years of college. I didn’t have much guidance in choosing a major, and like so many other freshmen, I only majored in what I liked to do for fun: music. Unless you’re that rare wunderkind, music really isn’t a viable career option, especially in this geographic area. A couple of years into my college career after wasting a few semesters and a few thousand dollars from my parents (sorry guys), I had this epiphany and then went into a period of indecision and ended up changing majors multiple times. I eventually settled on a degree in business administration. This was a much more practical choice; however, even a general business degree in today’s world is often too broad. There are very few employers looking for new college graduates with a general business degree. Employers look for candidates with specific skills or certifications who are qualified to fill a specific need or role. I worked for two years at random jobs that barely paid anything with my business administration degree while Tiff was still in school before deciding to go back to school and get a second degree in MIS (management information systems). This was a more targeted degree program that actually taught me business skills and prepared me to enter the workforce in my area immediately after graduation. Even before graduating with this second degree, I accepted an amazing job offer at my preferred employer, starting right after graduation. Now, I have worked at Phillips 66 for a year and a half as a Citrix Analyst, I love my job and my company, and I still play violin at the local symphony as a HOBBY.
To current high school students planning to go to college:
FOCUS MORE ON STANDARDIZED TESTING THAN GRADING.
Don’t believe what they tell you about grades/GPA. They won’t give you a free ride to college. What will get you the most scholarship money is your PSAT and ACT scores. And if you are a minority, better than better! (Eric is proud of the fact that he *almost* got $40,000 in scholarships just because he’s 1/4 Pacific Islander.) But seriously, we suggest worrying less about grades and spending more time on these tests. A student with only C’s and a high PSAT score feels good compared to a student with only A’s with average standardized test scores. Focus more on these tests than on grades, which won’t help you as much in the long run. Note: This statement refers to high school grades and should not be confused with college grades, which actually do matter, especially if you are preparing to apply to a competitive graduate program after college or apply for positions at preferred employers who are choosing from several qualified candidates. In college, it’s important to set yourself apart with your grades. In high school, make studying for the PSAT and ACT your priority. Once you’re in college, your high school grades don’t matter anymore.
APPLY FOR EVERY TYPE OF FINANCIAL AID AVAILABLE.
Sign up for every scholarship, tuition waiver, and grant you can find. It never hurts to try, and free money is free money. A scholarship of $500 for a single semester may seem like a drop in the ocean when looking at the grand total, but every little bit helps!
Ultimately, money is like anything else in life. Be smart, do your research, and make good decisions, and you CAN be successful. And it’s never too late to start making better decisions with your money. If you have an impractical degree with no decent chance of landing a good job in the near future, go back to school and make it count this time. If you’re only paying the minimum payments on your loans and basically just paying interest each month and nothing for the actual principal, make a better plan today to move forward. Whatever phase of this process you find yourself in, it is never too late to turn it around and emerge victorious.
Good luck!
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