It’s been seven years since I retired my student debt. I’ll never forget the mixed feeling of graduating from school with my degree in one hand yet starting a new life with 17K of debt in the other. To put it bluntly, the feeling sucked. Ok, sucked isn’t strong enough a word -TOTAL SUCKAGE is more like it. Anyone with student loan debt will agree that leaving the academic world with seemingly nothing more than a piece of paper (and negative money in the bank) is not fun.
Apparently, the average amount of debt a student carries upon graduation is about 19K. So really, my 17K wasn’t soo bad. But still, looking back on those early days makes my stomach lurch and my head ache. Back then I knew that debt felt bad, and I wanted to get the debt monkey off my back as soon as possible. So I made the commitment to myself and to my financial future to get outta student debt fast.
Here’s how I paid off my student loan debt in six months:
1. Negotiate your first job offer:
You have your degree, now use it! The most important action I took in paying down my student debt was to not settle for my first job offer. So many new grads get excited with their offers and accept them quickly in fear it’s the best they will get. Not true I say! Companies exist by keeping their costs down, hence paying their new graduate employees as little as possible. When you get your first offer (congratulate yourself for starters), and then negotiate for a little bit more. When I got my first offer, I thanked the company wholeheartedly for their offer and stated my excitement towards the position and working with their team. I also mentioned how I felt the job was a good fit for my skills and my direction. I kept the happy feeling going by saying I was flexible with compensation, however, would the company consider $X amount more as my skills were solid in areas A, B, and C. Surprisingly, this has always worked for me. While my fellow graduating students accepted their first offer, I negotiated better compensation.
2. Keep living like a student:
You’ve been living the life of a student up till now, so keep doing it! When I graduated from school I kept my same inexpensive apartment, my same bus pass, and my same habits. By continuing to live as I did when I had no money, I didn’t increase my cost of living and consume all my newly earned salary. Instead of keeping up with the Jones, I kept up with my loan interest and paid down lots of loan principal up front. Paying down principal quickly prevented my loan from increasing in size with compounding interest. In fact, since my loan didn’t start accruing interest until I was out of school for six months, I knew I had some time to pay it off before interest became my enemy.
3. Use all available tax credits:
In Canada, students get tax credits for tuition payments and the education amount. Back in my student days, I would file my tax return and use all my credits from my “Tuition, Education and Textbook Amounts Certificate” (T2202A). Sooo many students get this form and “loose it”. Well, let me tell you, if the good people at the Government of Canada are going to give you a break, you’d be silly to squander it. So keep all education tax receipts and use them towards paying less tax. The tax savings usually got me a refund, which I then applied to future educational expenses, and hence borrowed less money and accumulated less debt. If you live in the USA or another country, do yourself a huge favor and familiarize yourself with student tax credits in your area.
4. Save for retirement:
New graduates always laugh at me about saving for retirement. They say “I’m only 20-years-old, why do I need to start saving now?” The answer is simple, more tax breaks. When you begin your new job and start pulling in a nice salary (cause you negotiated from #1), you will pay more tax! Welcome to being an adult. BUT, if you start contributing to a Registered Retirement Savings Plan (RRSP) through your company or on your own, you will pay less tax. Along with paying less tax, contributing to an RRSP has the added bonus of giving you the feeling of growing a nest egg. Let’s face it, working hard and having nothing to show for it but debt repayment isn’t exactly fun. So growing some savings can really make you feel good. When I contributed to my RRSP way back then, I took my tax refund and used it to pay down more student loan debt. Consider this tax break the new math: you contribute to retirement, you get tax breaks, you get tax refunds, you then feed the refund to your debt. You win the “get outta student debt game!”
5. Delay buying stuff:
I’ve seen sooo many new graduates land their first job and then go out and blow their pay check on crap, or stuff. They might buy a new car, new stereo equipment, or rent a bigger apartment. Heck, I’ve even seen new grads buy a new condo! My advice is to delay buying stuff. If you really want to get out of debt, your goal should be to pay it down. Buying stuff just fills an emotional need for the moment, and then the consumer high is gone. I really hate stuff, and I often call stuff crap. After I graduated I bought what I needed for work, which was clothing. That’s it! I saved myself from the “buying crap” mentality and directed my earnings into my debt. It worked!
How did you pay off your student loan?
fox
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Your Two Cents:
I’m just about to go back to school, and I am hoping to pay it off as I go. Thanks for your tips, it’s nice to know I don’t have to have a debt hanging over me for the rest of my life!
@Julia Good luck with your studies! You are most welcome.
Great posts, just found your blog through the new network
One comment on point #2 about interest not accruing until 6 months after your grad date. Maybe this is true for a BC student loan, but for a Federal (Canada) student loan, it starts accruing from graduation day. Its just that payments aren’t due until 6 months later.
We had the money to pay my wife’s student loan off right after we got married in June… but putzed around because, hey, we had until November to get it paid. Send the cheque in August, and then had to pay 80 odd dollars of interest. Not a big deal, but it annoyed me…. that could have been a huge dinner date or something…
I’ve noticed that lots of students have this perception, so I try to remind them that even though they don’t have to pay until 6 months later, interest starts on grad day.
Great blog, and I look forward to going back through the archives.
Interesting posts.
Agree with David that my Ontario student loans accumulated interest from day one, although first payment wasn’t due for 6 months.
I had $30,000 in student debt that I paid off in less than 1 year, due to a combination of decent job and living like a student. Best move I ever made!
Keep squawking!
@David Thank you for making the point about Canada Student Loans accruing interest from graduation day. Indeed, this is a point many new Canadian grads miss with this type of loan. When I graduated I had two loans, one Canada Student Loan (which I paid off in under a month after graduation), and another loan which did have interest forgiveness for six months after graduation. Whatever type of student debt a grad incurs, I think it best to know the payment and interest details before taking on the debt. Knowing the details on a student loan can only better prepare a student for paying off the debt and building a plan. Thanks again!
@Ben Paying off 30K of student debt in one year is very inspiring and shows it can be done. Wow! When I paid off my 17K I felt free and light…and yes, paying down that debt was also the “best move I ever made.”
LOL I love to squawk.
I have a question.
How do I pay off my student loan that is almost a $17,000. I just got a new job and I get paid like $9/hour for 9 hours a day.I live with my parents. Soon I have to get me a new car also. What do I do?
“blow their pay check on crap, … I’ve even seen new grads buy a new condo”
This is not necessarily true, if you are in a hot realestate market and all signs point to a 10-20% increase in housing prices, you are better paying the minimum on your student loan and investing in a new home/condo. Live there for a year or two then refinance/sell the home and pay off your loan.
The bonus of this approach is you purchase a new home and pay off your student loan at the same time. My girl friend and I did this and payed off $75000 of loans in three years and still had money left over for a down payment on our next home. The best part…I never lived like a student once I graduated.
Smart investments are the key…just make sure the investment will yield a higher return than the interest on your loan. “Crap” can be defined as depreciating items
Hey. Thanks on your tips. I agree 100% on everything you said. I just graduated and I see some of my friends that graduated a semester before me that bought condos, new cars, etc. and have not even started paying their debt off. So its true,.. people want to satisfy their current desires but don’t realize how long the debt will haunt them!
I took a year and a half hiatus from school and have to pay off the student loan from my first year and a half ($13K) before they can transfer my credits…
I had lost all hope in finishing school.. but I’ve definitely felt a LOT lighter since reading your tips.. and I’m back in school @ a community college, where I DON’T have to take out a loan to complete my associates degree. =)
Thanks for this blog!! =)
I will be finishing school with $36 000 in debt in three weeks, but I have $23 000 in an estate account under my parents’ name from an inheritance. So, luckily, that can make payments if I find myself unemployed at first. Additionally, once I get a full-time job, my fiance and I plan to live off his salary plus 1/3 of mine and just put the extra 2/3 that year toward the loan. That should take care of it. I will need a newer car for my potential new job (outside transit boundaries and my current car is unreliable and 15 years old) but hey, we can do it!
Great post. Wish I had read it way back in 2002, when I graduated with a B.A. and a $30 000 student debt
I cleared $60k in 2.5 years, and increased my net worth to $80k. So I totally agree that it can be done if you just cut out all the fun stuff because you just need to clear it NOW before it gets out of control.
Fabulously Broke in the City
Just a girl trying to find a balance between being a Shopaholic and a Saver…
I have no desire to pay of my student debt in a hurry. It is at 0% (I’m a half-time student), and when I’m not in school, at about 4%. I’d rather pay the $125/mo and invest in my retirement, save for an efund, and even save for travel than dump a lot at my student loans. I just don’t feel it is a burden, but rather a bill. Like insurance or something. I pay it, but it doesn’t weight me down.
But aside from my current debt, I had about $6000 of private loans at a higher variable rate that I paid off ASAP.
With a 180K student loan and a desire to do charity… what to do? I have great motivation to develop and plan strategies for the development of the “underserved industry/world”… I am not talking only about the poor, hungry and cold out there… but also the many professionals that cannot apply their potential because of student loan debt.
I certainly am not going to stop attending conferences, info dinners, extra classes and seminars to pay off my 180K 4% student loan – a 2 year stagnation could mean a 4 year trying to catch up. Maybe not so, as I put it…
I agree with SP and Chris.
Same as SP – I paid paid off my high interest private loans the day before graduation, but even though I have $130K in federal student loans, I am in no rush to pay that off. The interest rate is fixed at 3% – what a deal!
Sure, it is always a good idea to live below your means, but live like a student? I’ve been doing that for too long (9 years) and it’s time to grow up to my big new salary I negotiated from #1. (wink) So, investing in a new home is a good move as it can guarantee a huge ROI. I recommend reading RichDad-PoorDad for some basics… As Chris so eloquently stated, “crap can be defined as depreciating items” such as cars, vacations, and, Miss Fox, even clothes!
Love you girlfriend! Great Blog!
great post. i paid down about 40K in a year and half. i made it a policy to pay at least so much every month, which was $2000. then extra money i put in as i could. with that kind of discipline and determination, come the payoff of the loan i was still in low-cost living mode AND i was in the mode of stashing much away each month. i was able to then put the same momentum into buying and paying off a car, which was badly needed.
Girl, you are quite amazing!!! Those answers you gave to minimize debt is phenomenal!!! I just hope I am able to delete my debt as fast as you did. By following your advice, I think I will be able to reduce my debt substantially within a small time frame.
Thanks so much,
Ashley
How are you guys doing this? You must have great jobs. I have a townhome which granted takes a chunk of my montly check but otherwise I’m quite frugal and I’m freaking out about graduating with my Masters and 100K in federal loan debt. My job is good but it’s not that good. I’m going to try doing some organization training and put all that profit to paying it down.
@Tizzy Great Question! I put 2/3 of my income towards debt repayment.
Good tips on this one!
Here’s another great one:
1. Do not buy a car if you live in a city!
Ok, so everyone makes it sound so easy. I’m graduating with my BA in electronics in 4 months and will be totalling about 80k. I only make a little more than half that right now(But hoping for a raise when I show the current boss the papers) And I’m starting a family and trying to get out of renting and into a small starter home. Consolidate, don’t consolidate, I’m so panic’d. All I think about is money problems. What do I do?
I have $110k in student loan debt. I feel hopeless sometimes.
I have $28,000 in student loans. I feel helpless because the interest is literally making it NEXT TO IMPOSSIBLE for me to ever pay back this amount in my lifetime. When I see barely any money going towards my principal, and my INTEREST is EATING up my money, I seriously feel helpless, and depressed.
Is there ANY way to not have to pay SOOO much interest to where I feel like I am barely making a dent in paying back my student loans?
I stumbled across your blog/site looking for reviews on MoneyDance 2008 (thank you for a thorough and unbiased review). I was intrigued by what else you had on your site and started at the “new” link and found this article on paying off student loans. I am in the process of switching to a different school, but will be bringing $12,000+ in loans with me with about that much racked up with the new school. The company I worked for would pay for my schooling, but was recently laid off which makes your entire site something of great interest to me. Frugal living is something I have attempted to do, but rarely succeed at. I guess I did not comment much on this particular article, and will close by saying that your suggestions and observations are spot on. Thank you for sharing what you did to pay of your student loan debt!
I graduated 11 months ago with $36,500 in student loan debt. I currently have $2,500 left and will be debt free by the end of this month! How I did it was that I promised myself that I’d live like a student for the next 1.5 years and then splurge on myself once I cleared my debt. With that reassurance in mind, I sucked up my pride and immediately moved back in with my parents upon graduating from school. I’m lucky, I didn’t have to pay a cent for rent or food. Basically, 90% of all my paychecks went to paying off the loan and the last 10% for expenses (monthly bus pass, cell phone bill). I started paying whatever I could from day 1, even when I was in my grace period. The key is staying focused and having a positive mindset. Contributing whatever small amount you can now can make a huge difference in the long run. Good luck everyone!
I really want to know what kind of jobs you folks have that you can pay off so much. I have a “good” job right now that pays about $1800/mo, my “cheap” rent is $750/mo, I have no car but I do pay for private health insurance, etc. After my expenses, I have about $400/mo, and if I even use $300/mo of that for my debt, it’s still pretty much the minimum payment. What are you all, CEOs?
Thank you for some great tips. Once you are deep in debt it is quite difficult to get out of. Even though cutting back on things helps but if you don’t have sufficient enough income to make large enough payments, then you do have to find ways to add to your income. I created my website just for this purpose to concentrate on getting rid of my debt once and for all.
I went back to school when I was 36. When I graduated I had $8500 in student loans, a new wife, new baby, and toddler. I am now 65 years old and my student loans $17,000 are on forebearance, I have several other loans that I stuggle to pay as I am struggling to find work and live on unemployment that is coming in again and social security.
Going back to school gave me satisfaction of getting a degree, but it was not until a little while ago did the degree even count and finally what counted was the fact that was not able to drive a bus because health issues and not my degree, so my job ended.
My Associates degree, and my Bachelors degree have given me nothing of value other than some things that I use from time to time in a job here and there…I say stay away from getting in debt unless you can really pay it back…
He says as he eyes the Fingerhut catalogue one more time…
sorry, thought this article was stupid… maybe it’s for the totally clueless people. anyway did all of this above and is still in debt 4yrs later. but it’s probably b/c i had a job lose and never got another job in the field i grad’d in
stupid economy. that’s ok though.
Want another way to pay off your student loan? Work for the government – at least in BC – because they will make payments on your student loan for you.
I paid my ~$20,000 with credit checks and then file bankruptcy. It was the quickest loan payment ever.
Now I’m debt free, making great money and keeping it for myself.
Yea, except you can’t get student loans discharged through a bankruptcy!
I have to Agree with Kelsey (see above)…
I have about $27, 000 in school debt and I make about $2,000/month. I bought a house not too long after school..and its even cheaper than rent, except when you factor in the heat/hydro. Having said that… I dont have a lot of money left over to be paying off my school debt quickly even though I would like to.. and even living frugally.. So, seriously? how are all of you people paying these high debts off in 1 year??? what are u doing for a job? you must be making a lot of money
1) Know your monthly Operational Cost: list ALL your expenses including the 5$ latté you buy every morning. You could be quite surprised how much you spend each month (I was).
2) Strip down your list to keep only ESSENTIAL items (rent, heat, grocery). You’ve just established your new operational cost, the amount of net income you should live on. Keep this number in mind … alawys.
3) Since you now have some free cash available every month, debt payement is possible. Just do it!
I put aside 50% of my net income, enjoy a cheap rent, live with no debt and avoid the use of credit. Don’t spend money you don’t have.
@Stef: That’s all well and good if you make a good living, but what about those of us, like me and Stacy above, who don’t make much of a living? I make about $1200 a month. She says she makes $2k a month. I pay $750 a month in rent (low for DC), I have no car, no insurance, etc, and I haven’t bought anything other than food and work necessities since November 17th, and yet, it’s almost impossible for me to pay more than the minimum on my credit card. Being able to save 50% of your income is great, and very admirable, but recognize that you’re a bit privileged in having a job that is high-paying enough for you to do so.
@Kelsey: I understand your financial situation is a bit tight and having a lower income doesn’t make things easier. But you must deal with your debts now before it gets out of control. A credit card is a dangerous ‘toy’ if not handled properly. If you find yourself unable to cover the full amount on your card every month, get rid of it! Get used to pay cash, stop being ripped off by interest fees.
@Stef: You don’t seem to understand. I make about $1200 a month. My bills, plus the minimum on my credit card, come to about…$1200 a month. I haven’t bought anything on my credit card in two years, but I still have about $6k of debt. I have spent a total of $30 on non-essential costs (i.e. anything other than food, gas, or rent) since November – know how I know? Well, I had $30 in cash in November, and I ran out of cash last week, and when I did, I realized that my debit card had expired back in November (our household expenses come from a joint account card that is separate from my personal one). I honestly don’t spend any money other than that I spend on essentials, and I don’t use my credit card, but it’s difficult to pay off debt if you don’t have a well-paying job. My argument was that it seems that the poster, and most of the commenters, have great jobs that allow them to save a lot of money.
@Kelsey : Ok … first, I’m no CEO, I can’t even afford to buy a house in the city where I live. That’s how great my job is
Of course, you will need some extra income in order to pay off your debts. There’s just no way around it. If you can’t cut anymore in your budget to free some cash, then you’ll need to use your imagination: get a better paying job, do more hours at work (so you have a full week) or get a 2nd part-time job, talk to your friends about your situation but get something going.
@Stef: Believe me, if I could get a third job (I already have two), I would have done so a long time ago. Unfortunately, I’m in a creative field, and those aren’t exactly hiring right now. I also simply don’t have time for a second job. I’m in the process of trying to start my own freelancing business and I currently work 14-18 hours a day, between my current two “real” jobs and the work I do trying to get my freelancing off the ground.
i’m still with Kelsey on this….not trying to gang up or anything.. your ideas are very good.
Just in regards to your comment “do more hours at work (so you have a full week) or get a 2nd part-time job” ..well, who’s to say that we aren’t already working a full week? Thats what Kelsey is saying.. she gets paid $1200/month working MORE than a full week and I get paid $2000/month working a full week (40hrs). But even at that it is still hard… and Yes, we Could get a part-time job but sometimes our lives don’t allow us to do that. For example: I’m taking evening french courses to make myself more marketable, I regularily go to the gym after work and so my only down time is on the weekend which is often spent doing renovations to my (very old) house. If I were to take on a part-time job on the weekend, it woudlnt last long at all because I would be completely burnt out. Everyone needs down time.
So..not trying to make excuses or anything.. just, it is admirable that you guys can pay off debt so well because a lot of us don’t have the luxury. Unfortunately, for some of us, we have to use our credit cards ONCE IN A WHILE (aka, rarely) to buy things like groceries, ect. I live in the county..1 hr away from my job (believe me, that is NOT ideal but I can’t find anything local at the moment)… so I spend $300 a month in gas! I know if I could cut down on that, I would have a lot more money for savings/debt repayment however, I simply can’t get a job that pays even close to what I get now where I live (and no, i won’t relocate – I just bought a house).
Seriously.. if people really dont mind, I’m interested in people listing what they do for a living??? It is more a personal interest thing and to learn where the market is (job wise). and Hell – the provice. That may help everyone get an idea where we’re coming from (literally). I’ll start!
I’m an Administrative Assistant in Ontario
Question, did your loan servicer ever send you a confirmation letter that your loan has been paid off? It’s been almost a month for me, and I’ve even called in and requested a confirmation letter and still none. Not sure how long this takes…
Some great tips and advise, I’ll definately share this on my blog as well. I will say, that it takes a certain kind of person that has some dicipline. Many people I deal with have little patience to to pull it off.
I am a 45 year old stay-at-home mom with 5 children ages 7 -18. My husband died in 2008. My oldest son will be starting college this fall. He is an extremely above average student, amazingly mature for his age, and a great leader. He has been on mission trips around the globe (funded by gifts from family and friends). He wants to be a Dr. He has landed a full-ride scholarship at an in-state university. Its not listed as the best for Medical, but he would be in a newly developing Honors/Research program. They would pay for everything except his food. PLUS $5K a year to their Grad school! It is not his first choice, but barring a private school giving him as good a deal, he is thinking he needs to “Settle” for this one just to avoid the debt. What do you all think??
Also as far as the comments and questions about jobs .. my husband got his Assoc and then his B.S. degrees shortly after we were married. He worked 10 yr as a computer consultant in a huge accounting firm in Chicago. He was laid off and ended up literally after 7 yrs and $50K in debt, going back to work for his dad digging basements, and ditches, and septics!! I kinda agree on one point … WHAT A WASTE OF MONEY FOR THOSE DEGREES IF YOU CANNOT FIND GOOD JOBS! That is so sad to read how many gave so many years of your lives and now it is not helping you get the jobs in a market you thought you could prosper in! I pray things turn around quickly. My debt was erased with the Life Ins proceeds. Sad way to get out of debt. But what really helped us .. the best day of my life financially was standing in walmart and maxing our last credit card on toilet paper!!! That was it … it was CASH or NOTHING. We found cheaper insurance. Our house interest rate was low. Just dropped again. And prayed like crazy! If its okay to post something specific … Dave Ramsey’s program was what finally got us thinking right about our debt and cash and expenses. Yes, it takes enough income, but going through his program, he has ideas we never thought of that really worked and decreased our expenses. Just something to look at. What about car-pooling? Or public transit? My husband finally gave up commuting a hour each way for the train. The hours sucked, but the money saved in gas – the train tickets = a lot more money kept in our pockets. It was worth the time sacrificed. When it got too much, he arranged telecommuting some of his hours. There are ways … we just have to be very creative. And by the way, Dave does suggest to build FUN money in! Just make it one $5 latte a week instead of 7 … even that helps!
Great blog,
Congrats on paying off your loans. I still have at least $25k of student loan debt myself. And it’s great that you managed to find a job that helped you pay off that debt.
Sadly I graduated about 2 years ago and of course the bad economy made it impossible to find anything out there for a new college graduate. I was pretty much stuck with the interest accruing and accruing and being stuck on claiming unemployment on my student loans.
I finally joined up as a VISTA, which is part of the AmeriCorps program which put my loan on forbearance, as the VISTA program ends up putting my loans on forbearance, plus at the end of my year term the interest will be paid off. I also get paid a small stipend. It’s not a million dollar salary but it works. Plus I live with my folks, yea I’d like to move out sometime in my future but with what I am making it’s just not realistic.
I hope someday I’ll manage to pay off my student loans and be debt free.
A couple of student loan tips I’ve picked up from friends:
If you are willing to relocate to a remote/northern community in Canada and are a professional of some sort (e.g., teacher, doctor) you can sometimes get your student loans forgiven.
If your work is seasonal (e.g., teachers), when you are in your non-working period, apply for interest-free status on your student loans. Continue to make the payments – they go to pay down the principle saving you lots of compounding in the future.
17k paid off in 6 months is quite an accomplishment!
Just thought I put in my 2 cents…
I finished graduate school (MD/MBA) in Chicago with about $120.000,00 in debt. Six months after graduation I received my first bill and almost fell stunned to the floor! But I had a plan… Back in college, while the upper class students were taking the left over money from their loans and traveling to Cancun and Europe, I put mine away and saved it in a money market account, back in the 90′s it paid decent interest. Then in my last year in college, I took all the $17.000,00 dollars and change from my savings and bought a house, three units, I lived in the basement and rented the top units to help with the mortgage. I went off to med school two years later and rented my unit as well. The house was paying for itself and I had $300 a month spending money. Then six months after I finished med school, and received my first bill, I put my house on the market (I paid 147K for it) and sold it to a developer for 530K! paid off the realtor commission, paid off my balance on the mortgage, paid off my student loans ( the largest check I ever wrote in my life) and still was left with enough money to by two cars (I got married to a Canadian and she needed a car) and two homes, one for us to raise our family in a modest suburb and the other is a rental … I love rentals as you can tell by now…
we are raising our kids very aware about money and debt and hope they too can live simple lives. Best to all!!!
When I graduated I bought a car and had no opportunity to negotiate for higher wages. After working for a year and making my monthly student loan payments I called in to see how I was doing. To my dismay I found out that I had only paid a small portion of the 14k debt that I had accrued. I then decided to use one pay check a month to pay off my loan and to use the other to live off of. I was living like a student at the time, so the 240/month rent with a roommate was an excellent opportunity to sock money away. I also talked to a friend who had recently married and started talking about RRSP’s which were a foreign concept to me and I started making contributions through my pay check, which if you can is excellent because you can invest before the taxes are applied by the government and a little better than waiting for the tax return. One other thing I did to increase my pay and tax return was to complete my post Bach in education, which was tax deductable and increased my yearly pay by over three thousand dollars. If I was just starting out now I would also take advantage of the TFSA’s available now which allow you to make money and not pay tax, which will be something unheard of in Canada. Oh also buy property their not making any more of it. I bought a cabin because I didn’t know where I would end up. Also if you are going to use credit cards use the ones with benefits and pay them off in full each month, NEVER spend money you don’t have. So the moral of the story is.
1. Pay of debts as soon as possible.
2. Invest in your future and use the tax advantage of RRSP’s (preferably through a before tax deduction from your employer
3. Get more education and right it off.
4. Avoid further debt.
5. Buy Property.
Hey there. I stumbled upon your site. Good stuff! I have student loan debt but no degree. I wanted to become a pilot so I got started doing that. $20,000 debt… also got myself $12,000 of credit card debt. That $20,000 isn’t even the whole cost, I was unable to finish. Thankfully the lender cut me off. I’m sure if things were better off they would have been more than happy to lend the rest to me. If they did I’d be screwed and be making crap as a pilot to pay it off. Would have been around $30,000 more to finish. $50,000 total. I’m glad it didn’t come to that.
So here I am delivering pizzas. That $12,000 credit card paid off, and I’ve managed to bring the $20,000+ down to $14,196.98 as of my tip money I just threw at it tonight. I pay it daily as soon as I come home with my tips. Sucks but I know I will be better off next year for it.
This is a little scary but if you’re wise this should work only if you have good credit though. I put all my bills, gas, food, etc on a 0% interest credit card and pay the minimum and pay what I otherwise would have on the card toward the student loan (about a grand a month) plus what I throw per month toward the student loan anyhow. Only so much though as that interest rate ends in november. So I’m not letting it get up too high. I’ll pay that off and the student loan should be about $12,000 at that point. I’ve already been offered another credit card with 0% interest for another 12 months from a couple different lenders. So I’m pretty sure I can continue this trend to get the balance to 0% interest and pay it off expeditiously thereafter.
It’s hard to say exactly how quickly I’ll pay it off, but I’m thinking no more than a year or so from now. Only faster and faster because the less and less interest per day I owe that my daily tip money handles the quicker and quicker I’ll pay the principal down.
I’m looking at going to pursue a real degree that would actually be a viable means of making a living. I hope I can do that with little to no debt. Mom is letting me stay here, not free but cheap. $250 a month. I have my other bills etc, but I think if I do it locally I can get by and not owe much if anything by the time I’m done. I’ll continue working of course. I just want to continue saving after the debt is paid off and have a nice sum of money to have a fresh start with when I’m done with college.
And of course the trip to Russia I’ve been trying to plan! I’ve been learning the language so I want to go check the place out. My friend in Moscow says he has a bed for me if I visit, so there’s an expense cut
Too bad you didn’t write this article 8 years ago. I could’ve sure used it then. I just paid my student loans off. It’s a great feeling indeed. Now it’s time to start a savings (after buying a new computer, which is hard to live without, goes against your non-crap philosophy, but, it’s hard to avoid).
I have such mixed feelings reading all of this. I had the intention of continuing to live like a student and pay it all down. I paid off my credit card the summer after I graduated college and it felt great!!! I went off to graduate school directly after college in a new, big city. I scraped the bottom of the L.A. rental market and got a HUGE apt. for $400 below market…..THEN: I hit a MAJOR MAJOR depression. It started with feeling stressed, then feeling the mild blues. I continued spiraling downward. By the time I finished my graduate program, I was literally hanging on for life. I COULD NOT BELIEVE it happened to me. All the therapy I ended up needing to “come back,” and join the land of the working….well, I pumelted into sooo much credit card debt. I feel sad reading this in some ways, but in other ways, I don’t know what my life would be if I had kept on keeping on feeling that miserable. It reminds me of where I, “could have been.” I’m unemployed again d/t U.S. economy and am depressed again (but not like before). Am trying to hang on so that I can once and for all TRULY come back, have ALL debt student loand and otherwise beaten back and be able to feel “weightless” going into a marriage (when I find the right guy)
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Don’t end up like me. This is very very true. I started borrowing in 1979. Went back 1980-83 but did not graduate. Student debt piled up. Deferred till 1991 when I went back to college again on student loans adding still more debt. Didn’t graduate. Went back in 1994 and piled still yet more student loans. Finally graduated 1996 ending up with one undergrad degree but 181 semester hours due to changing majors 4 times. SL deferred even to this day. Total= $76K…….that’s seventy six thousand dollars. I will never be able to pay this off and I’m 3 years from 62 and wanting to retire. I think I’m in trouble unless I find some solution to this.
I graduated high school in May, 1974. I got pregnant in 10th grade, got married, missed fall semester of my junior year. I went back for spring semester, 1973, taking 6 classes (no study hall), then full load of classes my senior year. My daughter was 22 months old when I graduated with my class. I divorced in December, 1977. Tried to begin college in the fall of ’78. I also had a son in July, 1975. So now I had 2 small children, a single mom, trying to start college 4 years after high school. I did finish one semester, and was having second thoughts about my divorce. Reuniting with my ex was a necessary thing to do since I very quickly learned the divorce was definitely the right thing that I did. I finally went back to college in the fall of ’88, got grants and loans (I shudder at that now). I graduated in December, 1995. I had borrowed just over $20,000. Six months after graduated, I began to try paying the loans back. When I consolidated, the interest rate was 9%. I was told I should consolidate because the rate was more than likely to go up. I was ignorant about what my options really were. So I signed. Good jobs were not forthcoming, so I did what I could get. Hence, deferences and forebearances for a year here and there until I’d exhausted all 4 years of them. Now my balance is over $33,000. There is no negotiating with Sallie Mae, and it is illegal to refinance student loans. But people who have ‘out of control’ credit card debt can get relief for their out of control bad behavior and have half or more of that debt just go away? Let those people file a bankruptcy if they want ‘relief’. I’m sure I’ve paid very near the principle of my loan completely, however I realize I’ve buried my head in the sand about it. I figured I’d die before I ever got it paid off anyway. I see no light at the end of this tunnel. That’s why I am now determined to get this ‘monkey’ off my back and kick Sallie Mae to the curb as quickly as I’m able. I will focus and just do it. I’ll let you know how it goes with progress reports every now and then. Or if I need another swift kick in the backside. Thanks!
I’m in the same boat as Stacey and Kelsy — 5 years out of school and I barely made a dent in my Stafford loans (and have only paid off a third of a private loan). That’s 25k total now. I agree – if you can’t get to step 1 in the article above, it’s a little hard to do the rest.
I was born and raised in california, went to school in san diego and stayed there after graduation. I got a B.A. and was making less than 35k when I left my last job. Take home after taxes/health insurance: $2050/mo. I invested a little in a 401k, and I averaged about $700/mo on rent (with roommates! that’s the average for the area). So basically, after all my bills (basic necessities, no cable, and yes, a car is a necessity in california) I had maybe 600 a month left to live on. Oh, and I have taken advantage of tax breaks every year. But it doesn’t amount to much – the interest on my loans is already low, so I don’t get much of a refund.
So after about 4 years, I got tired of “living like a student,” incredibly tired of roommates, ventured out to get a cheap studio ($825/mo) and after nine months had to move because the landlord was selling. I finally ended up back with my parents who live in the middle of nowhere because I came to the realization that I just couldn’t make ends meet on what I was being paid.
The thing is – “living like a student” SUCKS. I found that after about 3-4 years of it, I was so drained by it. I want to live comfortably — doesn’t mean an expensive car and a mansion or expensive vacations. It just means not persistently on the verge of physical/mental/financial collapse. On top of that I’m single, and somehow it seems like my married friends are doing a lot better off financially. It takes two incomes just to afford their modest lives.
And here’s the catch 22 — a better paying job often means more education. More education means going further into debt. So right now. I feel pretty stuck. My parents live in a rural area and jobs are slim pickings but I’m still going to try and find work here for a year or so and pay down my debt as much as possible. Maybe I need some real estate and investment advice. Some of you sound like wizards! I think I should move to Canada…
Oh and Becca – thanks for the Americorp tip, I am totally going to look into that. I’m ready for some meaningful work anyways after sitting in a cube for 5 years …
Thanks 4 these.but i’m broke and student.i need help 4 fees,exam is at d corner.thanks
Good tips – I used the same concept to pay off my car as fast as possible, and saved several thousand dollars in interest.
When it comes to college, though, best to not get into debt at all if you can help it. Scholarships, grants, internships and a part-time job all contributed to my college fund – I graduated last year with less than $1000 to my name but completely debt free! It’s so liberating to not have anything hanging over my head like that. I was able to get my dream job, working for a non-profit in another country instead of having to choose the job with the best pay and work my butt off for the banks.
Hi..Thanks for this..I do have trouble paying my loans..I pay them but in small parts and interest accumulates..i alsohave the habit of buying…Buying what i do not need at times..I will cut this out, after i do get a few more things..But it needs to stop . I see that all these little things i buy, money can go towards paying the debt properly. The less you spend , the better. Thanks again.
Great advice ! Thanks.
I don’t understand how people can have such high student loan debt!! I graduated with my Bachelor degree only owe $5,000 which I can pay off right now. However, due to the economy and my position being frozen I have decided to keep the money in the bank plus other money for any “rainy” days so at this time I am paying the min. monthly payment until another position comes along. But it was a great post with good tips. I still live like a college student
I can do this one better. Join the US Army and get your debt paid off in one day.
Plus you get a job and learn new skills.
No im not a recruter just think this may help some who aren’t getting a job in todays economy.
I know of a person who purchased rental property with the intent of refinancing in order to pay off student loans. With that in mind, they could write the interest off!
Don’t get a new car, live with your parents, don’t use your credit cards, find a boyfriend to pay all entertainment, fun, and food. Stay out of the malls and stores, shop at 99 cent stores when you need stuff, use interest free credit checks, and keep your eye open for better paying jobs. Work for the state or government- good 401k. Life isn’t perfect, but at least your credit stays well.
$100k in debt from school and have been in the industry for one year. Its a challenge but it helps to reduce any and all unnecessary luxuries such as cable TV and super high-speed internet. Eating smart and not eating out, also resorting cheap hobbies like running and biking to stay fit! With all of this, pay off your highest interest loans/cards first!
Great article. Bless you for giving people hope regarding student loans.
Education is investing in yourself, so be sure you invest wisely. However, paying off any loan quickly is easier than many people think. Early in most loans, a large part of the payment goes to interest and only a little goes to pay of the principal balance. So multiply that monthly principal amount as many times as you can, and add it to your monthly payment. If you doubled the principal, you just paid of 2 months and shortened you loan by approximately 1 extra month. If you quadruple the principal paid, you paid off 4 months and shortened your loan by about 3 extra months.
I ran a quick calculation at the us government student loan site and found that a $25,000 loan has a 10 year payment of $287.70 with interest of about $141.67 at a 6.8% rate. You would pay down the principal by about $1,8000 that first year making only the standard payment. However, if you double your payment to $575.40 per month. You would have paid your principle down somewhere between $5,000 and $6,000 in that first year (about triple the previous rate). Your $25,000 loan would be gone somewhere between 3 or 4 years, not 10.
So doing anything you can early in a loan makes a huge difference, which means don’t wait to figure out ways to pay it off quickly. If you wait 5 years to do something extra, other people would have had it already paid off and started using that payment to increase their investment savings.
If you can’t find extra money, then copy the couple recently in the news who earned several thousand dollars for their wedding expenses by collecting and selling aluminum cans. Or you could try to find loan forgiveness programs from employers or the government. There are lots of these programs now.
Even though debt feels bad, compare it to how much you earn in 3-5 years. The debt starts to come into perspective when you think about a friend who went a cheaper route for college and took 6-8 years instead of 4. Many careers will pay between a quarter and a half million dollars in those 3-5 years. Even lower paying careers will pay between $100,000 and $2,000 in that same time. If you choose the slower but less expensive college, you cannot get those lost years of your life back later. So keep in mind the trade offs of finishing sooner versus avoiding loans and finishing 3-5 years later. Thanks.
Hi,
I have a similar situation. I am 57 and graduated with an associates, BA, and went back for a Certification in English. Started my Master’s. Had to stop and pay on $25,000 student loan and still have a teacher’s aide and bus driver job. Only make about 18,000 per year total in this depressed area. I bought a car for under $3000 and paid it off. I have a son in college who lives at home but doesn’t contribute. He does pay for his own truck and entertainment. So, I only provide food and housing for him. I don’t mind as he has dyslexia and I enjoy knowing he is safe. I also enjoy his company.
Anyway, can’t find a job in English, too many English teachers right now, and my Certification just lapst. You have to go back and get 200 units of continuing education to renew it. My mom was ill last year and I didn’t get the required hours. So, here I am.
When the funds are this short, I find that I must set prioities. Rents here are 550.00, utilities are (gas, electric, phone, internet, about 350.00. Groceries about 400.00. I shop at thrift stores. sell stuff on eBay, and buy on eBay, and look for free entertainment. Walking, visiting with friends, go out to eat, but find the places under $10 for dinner and only once a month at payday,free concerts at the school. I invest in the 403 at the school and I have put $50 a month into an anuity. If something should happen at work I now have total about $5000 in those two retirement plans that I could fall back on after only 5 years of working at the school.
Something to think about, I had a friend who was retired and had his home paid for, couldn’t drive because he was deaf, and his take home pay was only 1300.00 per month. He managed to save half of his pay by buying US savings bonds. It takes the money away,( you can’t cash them for six months) so that he didn’t spend it. Then, when he wanted to pay the property taxes, he could just borrow from himself. He would take out $25 a week to eat on. Usually a bisquit/jelly and coffee and the Jr. Whopper meal for lunch. He ate something like soup for dinner at the house unless he went to someones house for dinner, and he went out to a buffet to eat and usually took me and my son too on Sunday’s after Church. He saved enough to pay cash for a new Ford Escort one year so that I could drive him to the mall in it doing that.
It’s what you do with what you’ve got that counts. Figure out a way to get the rent down! Get a roommate, live at home with your parents, buy a trailer for under $5000 and find a friend to let you park it in their yard. If you can find a duplex and the funds to get in it, repair it, and find great renters with a job thats’ great too. But, there are less expensive ways to do things. Look for them and work on the debt.
Good luck
Where is the reality in this plan for the average student? These are great tips but I can honestly say I don’t know any college comrade who would be able to actually negotiate that harshly with an employer, especially in the USA economy today…even if that miracle was to occur, delaying the purchase of things is hardly reasonable. Not many grads in the US have an inkling to move home with mom and dad…we need money for rent, food and oh perhaps a bed. Continuing to live like a student IS a great idea…being sparing on food, clothes and entertainment is a great idea. I also think every student in any country should become acquainted with student tax breaks. I still think there is little reality in most of these suggestions. I wish someone would write a book about how to “spend” money when you have no money.
If you want a break from student loans, go get a graduate degree. Graduate degrees are the only investments worth making nowadays as college degrees are far too common. Your ROI (return on investment) for an additional year or two of school beyond your BA/BS will help you pay off that student loan quicker. There will be naysayers who may argue you will have additional debt because of piling on more loans. Agreed. This is true. However, look at the statistics somewhere online of future earnings potential once you get a graduate degree. I win. Also, try to apply for grants, independent scholarships, etc.
what about med or dent students with 2-300k in debt….haha…i guess we also make more.
well i graduated from college back in 2002, however, i was making an ok living but to be honest my mistake was ME. I was irresponsible with money, which is how I have accrued my $89k student loans and have to start paying 820/m. Now I must admit i have learned my lesson, so much so that I am living much more frugal and even giving up on cellular phones with all the extras and even selling my phone to buy a cheaper phone so i can get a cheaper plan, even my cable/dsl service i have managed to downsize to under $100, that is my goal so far to keep my utilities to under $100 and i have done that. Now from reading the posts the salaries and positions and real estate depends on WHERE you live. I live in Miami Beach, Fl, which everyone should know the housing market here is terrible (down something like 14%!) jobs suck BIGTIME, unemployment is at what 20%!! I made a jump from a civilian position unto a sworn position – I am a police officer, so the pay is getting better. I am fortunate bc i get some overtime depending on my court time, but that money I dont count it, since i cant depend on O/T, i budget my check on what i would make without the O/T. Now for me I would love to lower my mortgage which is 158k @6.5% adjustable, and my loans at 89K @ 820/m, I am looking to refi and lower the interest at a fixed rate (any suggestions PLEASE LET ME KNOW), the same goes for the loans, anyone have any other lenders who may decrease the interest on the loans, my current lender is ACS, the interest rates are at 7.60%, and three @2.480%…how can i lower these bills and where can i go to get lower interest rates?? should i consolidate my student loans? how can i make this better?
thanks to all…and good luck with all ur $$$$ endeavors!
I have to agree with Stacey, Kelsey and Amy. While your tips are great for those in positions to do them, you have to admit that this is not for everyone. To think that in this economy some things are ‘easy fixes’ like getting another job, relocating, cutting back and assuming as if these circumstances are not already in play – well that just isn’t plausible. I know personally for my case I went back to school after 5 years of being out and by the time that I am out I will be about $60,000 in debt. (And in mention to someone’s comment above – how people can get such high debts – there are many factors; the school you attend, how many years you are in school and the tuition fees). I know when I graduate and get a job – I will be on a teacher’s salary which starting is only $40,000 a year – and that is actually HIGH compared to most areas. As far as another job – teacher positions are very ‘time’ demanding and I will have to go BACK to school to get my Masters at the same time so the issues with picking up another job will be impossible. With my rent/bills and other necessities AND the student loans I am currently paying back right now as well – combined – I will just make it to survive…and get this – I have NEVER had a credit card, so no credit card debt to worry about. Not that it will matter because soon it will be ALL student loans and well as you see above…there is quite a few. So no – these tips are not for everyone – helpful for those that make enough and do not currently have lives that are already full to the max with the daily demands of spouses and families and can make it work. The idea of living frugal lives definitely holds merit but to assume the loans can be paid back quickly for those of us that will barely get by as it is…well I think you see where I’m going here…
I ignored [forgot] the loan for 15 yrs. and when they caught up with me I had saved enough money to pay it all off with the money I saved after working all those years!
I’m good with my money like that.
I have 190k in private and federal loans from school. I have only been out of shcool for one year and was in school for 5. The initial amount of my loans was closer to 100k. I have built up that much interest already. The payments for these loans is about $900 a month. On top of that i have credit card bills which average $400 a month, car payment, car insurance, and cell phone bill. I moved back in with my parents because I had no choice because after paying all my bills i have about $300 a month left over and that usually pays for gas, groceries, and food for my animals. As for buying things you shouldn’t liek a new car. I had no choice. I had too many loans so i couldn’t get approved for a used car or to lease. I was only approved ot buy a new car. My car was undrivable and i was using my mothers to get to work, so i had no choice but to get the car. There is no way that I could ever pay off my loans within that short amount of time. There is also no help for me out there to help me pay them off faster. They are at the lowest payments now and I fear when the payments will increase, since i’m on graduated repayments, that I will not be able to afford them. I am glad that it worked out so well for you…but I think it’s kind of ignorant to say the things you do as if you know everyone’s situation. It’s not always simple and there is not always help. I am lost and swarming in debt all because I paid for school myself….it is sad that america does nothing to help out students after they graduate.
O rly? @ #1…
Nice of you to assume that everyone has job offers flowing their way in such tough economy. If you even dare to ask a company for more money these days, they’ll just go to the next person who will gladly take what they can get.
I think the above article is a good example of what to do when you have the right job in place and how not to squander your money away. I’m still working on my degree as due to that wonderful catch phrase “budget cuts”, my entire program has been cancelled forcing me to find somethng else. I just so happen to like medicine and hopefully will find my nitch and make decent money. I feel for those people on here who follow their passions and convictions and chose a more artisy career path. I think too often we are told to go to where the money is at, but not to go to where the heart is drawn.
I also think that there could be many underlying factors as to how someone is able to pay their debt entirely. The good paying job, having mom and dad chip in with a few bills every so often, not having children, being able to receive decent health insurance through work (because believe me some jobs offer nothing more than the title health insurance), and many other reasons that could help someone better pay off their debt than someone else. I think that even if it takes you 5 years to pay off a debt, you know what, at least it is paid off. Sometimes being able to pay off thousands of dollars of debt within a year or so sounds nice but the reality can be quite different for many.
College grads today are in the worst possible job market because they are competing with new unemployed people who have 10 years or more of experience in the field as they apply for entry level positions. The average entry level salary today is about $2500 after taxes. There is no room for negotiation for salary or benefits because thanks to online career websites employers can pit dozens of equally qualified people for the same position. In other words it becomes, not about how qualified you are, but how low you are willing to go. Some people are so desperate they even take jobs that don’t cover all their basic expenses (not new cars or stereo systems), never mind the $50,000 student loans they are carrying from top notch universities. So, it’s not a matter of going to the wrong or right college anymore, there are simply not enough jobs and every six months a new crop of new grads graduates and starts looking for work.
I think the student loan situation is at a crisis level and let’s not forget that this is the only debt that you can’t get rid of even through total and complete financial bankruptcy. THE FEDERAL GOVERNMENT NEEDS TO TAKE ACTION TO HELP CURRENT STUDENT LOAN HOLDERS TO REDUCE THEIR INTEREST RATES DRAMATICALLY AND EVEN OFFER MORE TAX BREAKS. The problem is that no one feels sorry for college grads, this modification has been done for mortgages and it can be done and should be done for student loans. STUDENT LOAN COMPANIES ARE ROBBING STUDENTS BLIND WITH INTEREST. Guess what folks? Student loans are one of the factors that are keeping these bright working students from making major investments like homes and cars that ultimately help the economy. So, if you would like to sell homes, cars and other big ticket items, students should be helped to pay off loans so they can have income to invest in the economy. People are paying student loans into their 40′s and that is simply outrageous.
Why is everyone so concerned with paying off student loan debt right away? It’s one of the types of debt that impacts your credit the least, second to mortgage debt. At 31, I accept the fact that my student loan debt won’t be paid off until I’m 45. I have 24k left, at 2.625 interest rate. If I were you, I’d be more focused on paying off credit card and auto loan debt – these types of debt impact your credit score and availability much more than student loan debt does. One note – if you’re in the US, you can’t deduct student loan interest until 5 years after your loan enters repayment.
Debt is making my life extremely miserable right now. I made some mistakes in my life that I will continue to pay for. That is why I find this article very motivating and helpful. There are little things in my life that I can change that will make it soo much less stressful. The stress just makes me want to just tuck it all away in a black hole somewhere to try to ignore it. But by doing that you’re only adding more stress by worrying about the consequences.
I think its time to think about downsizing for a couple of years..Maybe by the time I’m done or at least halfway finished I will be able to breath again.
Again Thanks for the article. I already know it will benefit me in a huge way.
See the thing is with most of these people is that they can’t live without their daily routines that are costing them thousands and thousands of dollars. Most people dont need half the crap they have or half the services they think they need. Unless you are am on call at a job you really dont need a damn cell phone. At the very least all you need is basic service. Stop the BS texting, app usage, and long costly conversations that can wait until your minutes are free.
If you eat out all the time or just sometimes at expensive places then you don’t have the right to complain about your debt. Especially if its all being charged to your credit cards.
We need to stop living lives that we know we can’t afford in the first place. It will allow us to live the lives that we can without soo much stress. Think about it if you have to put it on a credit card you cant afford it. So dont buy it.
Saving just a little at a time can do so much. It can allow you to have that emergency money you need to fix the car or pay that unexpected bill. If you’re lucky enough to avoid those circumstances then you can use the money for well deserved vacations.
But until we are debt free we need to live the life that we can pay for without making that number increase.
This is just my perspective. I enjoyed your article Thanks for sharing.
Great posts, just found your blog through the network, I graduated back on 2005 and left Uni with NO DEPTS!! Yes that’s right no student loan crap. How? Simple never asked a loan although I been giving all the forms and stuff I refuse to apply, I pay my tuition fee cash which was about 1300 pound a year and worked weekend 30hrs to pay of my expenses (books, transport, and small fees No fun and I only use to do my shopping sale time before summer for winter clothing and after chrisms sale for summer stuff. I Got a job after 3months of my graduation and work as a public service sector. I go holiday 4 times a year and manage my life quit well balance between. I will share with your blog some of fun and carefree minded friends of mine. Average of my flow student left Uni.
With paper and staggering 20,000 pound starling on their neck. My advice is I don’t know about North Americans but in UK student I will say U DO NOT NEED STUDENT LOAN TRAP, DON TAKED. Suffer few years and enjoy LONG after….one more to add, Goof question Kelsey, must of the blogers write like they all are CEOs maybe they are hmmm. Good luck my friend. Thanks again FOXE
http://www.stockrocker.blogspot.com
There are a few ways to pay off these loans if one is willing to pursue them. SLRP, student loan repayment plan in some federal jobs. They pay up to $10K per year for each complete year you are with a governmental agency. Like Social Security Administration, US Forest Service, Army Corps of Engineers. Be aware too these mentioned above start at the GS-5 level which any bachelor’s is basically qualifying. If you’re young working one’s way up is pretty easy. Also, these $10K per year payouts have to be reported to the IRS so you pay taxes on them as income.
Another way I believe is service with the Job Corps.
One more way is by a job as a teacher and the incentives they offer.
Still yet another way is [unfortunately] if one becomes disabled.
I saw someone had an $89K loan, mine is $76K. I was irresponsible, hard to admit, but it’s true. That’s why mine got so high.
To clear up any questions. One must take a job with the federal gov’t which offers Student Loan Repayment. Not all of them do.
Best thing is not to borrow more than you need.
Get a roommate to help with rent/bills, carpool, ride bike to and from work to save gas AND get exercise simultaneously, pack your lunch, split a wholesale club membership with someone, work at a university and get full tuition waiver…
Interesting subject, interesting comments. Many of us have a lot in common. The one person who said in order to get the higher paying job, one must pursue more education then falling into even greater school loan debt in the process makes a good point. I know this all too well having pursued a graduate degree and now a law degree which will have me facing a 6-figure loan debt upon graduation. With that said, I plan to pay as much extra as possible each month and to apply annual bonuses (as much as possible) to the bill. With this plan, my loans will hopefully be paid off in a fraction of the time allotted.
Also… word of wisdom for those newly grads just getting that first job… you can also negotiate as part of your compensation package dollars to pay off the school loans. It never hurts to ask. After all, you don’t get what you don’t ask for.
Cheers!
What are the consequences, really, specifically, IF I don’t pay at all?
I see lots of info on the net about getting a student loan, paying off your student loan, reducing your student loan, etc. but nothing really about the darker side of things ie:
1. What will happen if you don’t pay off your loan
2. What happens to your student loan once you die
3. What happens to your student loan once you move and live overseas permanently
4. Ways and/or tips on how you can get your loan forgiven
Maybe I’ll just find out the hard way…. and then maybe I can blog about it, except for #2. lol
yeah, yeah, I know all you haters are gonna start attacking me now. And yeah, you’re better than me.
Any info on the 4 points I mentioned?
The average student debt is only 19K??? Wow, that’s nothing! Graduate school is very different from that! Try 150K of student loans in Canada and 250K in the US.
Thanks for your great advice. We have been saying the exact same thing to our adult children: pay down your debts, defer unnecessary purchases, live frugally, invest in an RRSP…but do they listen to their parents? Eh? Eh? Maybe they will listen to you.
I think this article presents a pretty unrealistic story for most graduating students. First, in the current economy, most are lucky to get a job interview or the even more coveted job offer. Negotiate a higher salary for an entry level position with no real world experience in the field? HA. I’m glad to see you a) netted $17,000 in 6 months b) did this while eating and paying rent c) saving for your retirement. Your article should really be titled how to pay off debt when you are making much more money than anyone else your age. Most would be lucky to pay down that kind of debt in 5 years.
I agree with you there, Scott. I’ve been sending out 4-5 resumes per day for a month and a half, and have only gotten two responses – both that the position had already been filled. My resume is a good one, but I don’t have much experience, and in this economy, it’s tough enough to get a job offer, much less one that you could risk negotiating! And I can’t imagine what her salary must have been. The best jobs I’ve been able to find that I’m even remotely qualified for pay, at most, in the upper $20s to lower $30s. Most are lower than that. Especially if you’re living in a major city, it’s just not really possible to save the kind of cash that she talks about in this post.
In Canada, student loan debt can’t be included for discharge under a bankruptcy during the ten years after graduation (it used to be two years, but they quietly changed the law back in the late ’90s and the constitutional challenge to the legislation failed). But consumer debt is different. And if you happen to have access to consumer credit (credit cards, line of credit at a bank) you can “flip” your debt by paying down the loans or a big portion of the loans with consumer credit. So if you happen to not be one of those who is able to negotiate a higher salary, or have parents or a spouse who is happy to support you, or have loads of savings or a pile of money that someone has bequeathed to you, and your debts are more than your yearly salary, and you have access to sufficient credit to cover all or a significant chunk of your student loans (and any other consumer debt), then bankruptcy after flipping the debt might be a good option for you. There are some costs to filing, and consequences for having a bankruptcy on your credit report for 7 years after the bankruptcy year. But if your debt is crippling you and you have the credit available, I’d say look into it and plan it carefully, and after you’ve flipped the debt, make an appointment with a credit counsellor for a referral to a friendly trustee in bankruptcy. And be sure to keep all your records organized and complete – banks and student loan centres don’t tend to communicate well with one another, and you will want to have proof that your loan payments were made and that the resulting credit debt was discharged under your bankruptcy.
Hi Stacey (from Ontario), Just a thought, have you enrolled with a temp agency as a contractor? This could help you a bit to find a better paying Admin Job in Ontario. Google temp agencies in Ontario, especially those with contracts with the Governments and large businesses (e.g. IBM, Royal Bank, etc.,). You should be able to make a few more hundred dollars per month immediately, and you will have the opportunity to apply for permanent jobs once you are inside. Good Luck.
Hi. what a great share dear! thanks a lot . I’m Glad read this subject make me not jump to another problem. Thanks GOD!
Hey luluwins, that some great advice you gave: “live with your parents…find a boyfriend to pay all entertainment, fun, and food.” But what advice do you have for those of us who can’t/won’t freeload off our parents and don’t want to behave like gold-digging whores?
Nice article, but I have to agree with several people in that most new grads aren’t going to start at high salaries like the author. I’m in very much a similar boat to Kelsey in that the starting pays I’ve been looking at are at best around mid-$20,000…and I graduated in 2000 and have been looking for any job I can find. I’ve been forced to take “seasonal” jobs to keep some level of experience going, but those jobs are really starting to get old…not to mention taking a huge toll on my marriage.
I currently have a little over $20,000 in school loans. I’ve used up all of my deferments and have used multiple forebearances. A divorce may be in my future, in which case a job at Wal-Mart will probably be where I end up…at least for a while until I can get some money saved up… I don’t know how I’m ever going to get this loan payed off.
I’d love to go back to school and get an advanced degree, but will never borrow money again. I truly feel that I went to college in order to learn a hobby…not a career…
BTW, I’m 40 years old…
Well, this is for J., I found out the hard way what would happen if you dont pay your loans, 1.) they garnish your wages here in Florida is about 15%, I dont know if its the same for other states, 2.) they take away your income taxes until the loan is paid off. To them if the payment is Involuntarily, they do 1 & 2; so its better to voluntarily pay your loans, I didnt want to lose my wages or income tax returns. And as for Kelsey, i am with you it IS extremely difficult these days, though I cant offer any advice all I can say is hang in there, and just pay what you can for now, eight years ago i wasnt able to pay ANY amount, and though i may owe more now i am grateful that i have gotten to the point that i can, its a struggle, but i can do it. thats what you have to focus on – your future. if its now today, you WILL be able to pay off those loans. If no one hires you now, they will. just dont drive yourself nuts by comparing your situation to someone else’s, you will get there. focus on what you have now, the positive, on what you ARE doing, on what you ARE making and you will see before you know it, you’ll have a job with a good income and paying those loans.
It is finding that viable payin gjob to susutain yourself on the basic needs of life and get rid if that debt. As fro RRSP’s, I would invest in something else as one is taxed to the hilt when cshing them in. They too are a cash grab and you lose at leats one third in taxes.
Yeah… the author definitely has some good points here…. but unless YOU graduated as a Petroleum Engineer and worked a crap load of overtime; this does not apply. 17K in 6 months is $2833/month at 0% interest. Most people with degrees will not make that much monthly even after 5 years of experience. (For those of you who like to look at actual figures, not vague bullshit like “live like a student… make tons of cash, then VOILA! NO DEBT!”).
Most people I talk to that have been out of school for 3-5 years are still deep in debt, and still live with 2-3 other people. They don’t live lavish lifestyles or even have cars. They graduated with little debt because they worked the whole time and ate nothing but oatmeal and pasta, like myself. They started with salaries between 52 and 70K (which is high end for new graduates, according to any study). They still have trouble paying down debt, and they certainly cannot afford to pay off $2833 a month.
My guess is the author graduated as a Petroleum or *high end* chemical engineer, or a veterinarian, or a lawyer (and if so, she must have worked the whole time during school so as not to build so much debt while going). Then she somehow convinced an employer to pay her more than her peers with no experience in the field; in a shitty economy. Then she managed to find someone stupid enough to pay her inexperienced self for side jobs. Either that or she had established another viable income before any of this happened.
So Kudos to you author, for being very fortunate in so many ways. For 99% of your readership, the headline is only good for sensationalism, and is either one of two things: shy on data of how she ACTUALLY made this work, or completely false. So maybe next time put some realistic figures up. And if this $17K is actually real, why don’t you detail EXACTLY what you did.
For everyone else, expect to live like a super miser and be in debt for a very long time. It won’t matter what principles you abide by, it won’t be all sunshine and roses.
If you’re like me, you went to school with very little savings from summer jobs, you worked your way through school, you couldn’t live with your parents and the only help you had was from the bank at 7% (+) interest. And if you slugged through crappy jobs to make it to a decent salary like I did, you know that sometimes regardless of how much or how hard you work, opportunity will not always be there. I’ll say this even though I make almost double what most people do my age, and 20% more than most in my field. I still have debt myself, and I’ve been eating oatmeal and the same damned lunch every day for 5 years.
Stay real everyone.
I have to agree with Mac. There have been a number of articles similar to this one that have cropped up over the years that claim that you can pull yourself out of debt by living like a pauper. And as much as I would like to pull myself out of my student debt within a reasonable time it just doesn’t seem likely. Unless one plans on putting any ideas of getting married, having at least one decent used car (because if your like me taking the bus everywhere becomes increasingly unreliable and impractical), and owning your own home, than to live like a pauper for 5-10 years is not going to get anyone anywhere. It’s like you are essentially putting your life on hold to pay on a debt that is not bad debt to begin with. Especially if your debt is in the 30,000-60,000 dollar range there is no feasible way to pay all that debt off in a year or two, I mean let’s be realistic. I always found it funny when I read how the author was able to find a job that paid what she wanted. I have 2 more years to go in school and I can only wish that during these crappy economic times I can only be so lucky to find a job that can pay what I want.
The only thing I can suggest to those who may still be in school and working on their degree is to do internships if possible. Get some real world experience because more often than not, a stand alone degree without any experience is not enough. Get at least a few professors on your side who would be willing to be a reference for you. So when you do finally go out into the workforce you have someone who can vouch for your academic credentials and your work ethics. I know people say work during school but IF you can fit in at least a day or so of interning somewhere you may be better off. Because if, for example, your a biology major and most of the jobs you worked are small retail jobs it will only be that much harder to find a career in your field. Good luck!
Well, here goes, from an old fuddy -duddy.
I graduated in 1999 with $20K in debt. I worked almost full time during school. When I graduated, unemployment in my area was 19%. Rather than go with temp agencies, I contracted myself as an admin — sure not really in my field, but I was paying the bills. I lived at home, or with relatives and paid fairly low rent (about 80% of market).
When necessary, I used forbearance and deferrment. Please note that my loans were taken out before the current benefits, so I do not qualify for teacher loan breaks, half time deferrment or any other nice perks put in place by Clinton, sadly. I am back in school now, and taking out loans for a master’s degree. Which is an excellent way to ride out a recession BTW.
Keys: pay all your bills, call and negotiate if you are having trouble, sometimes they can bend the rules. Sell stuff you aren’t using on a regular basis and put the extra towards loans, if you are thinking of going back to school consider if you have a half time deferment — it may make sense to stick to taking 6 credits if you are having trouble finding a job, if you have high loan amounts. And the extra learning and networking won’t hurt!
@STACEY AND KELSEY, QUIT YOUR WHINING AND MOVE IN TOGETHER, YOU DESERVE EACH OTHER. ON THAT TOPIC, GET A ROOM-MATE AND SHARE YOUR CHEAP $750 RENT, OR BETTER YET, MOVE BACK IN WITH YOUR PARENTS SINCE YOU STILL BEHAVE LIKE A CHILD. THANK YOU.
AND ALSO @STACEY, IF YOU ARE TAKING THE TIME DURING THE WEEK AFTER WORK TO GO TO THE GYM TO EXERCISE, THEN YOU ARE WASTING PRECIOUS MONEY ON THE MEMBERSHIP. INSTEAD, WALK DOGS FOR EXTRA MONEY AFTER WORK (FREE EXERCISE) OR BABYSIT AFTER WORK WHERE YOU CAN ALSO GET PAID WHILE DOING FREE EXERCISES. AS STEF SAYS, GET CREATIVE. NOW I KNOW WHY STEF HAS A GOOD PAYING JOB AND CAN SAVE SO MUCH MONEY………….SHE IS CREATIVE!!!!!!!!!!!!!! YOU AND KELSEY COULD STAND TO LEARN SOMETHING FROM STEF.
Ok – Jennifer.. who is acting like a child? re-think your statement when you speak to people like that.
As a matter of fact, I’ve quit my gym membership and I’m exercising from home now. On note of your point in regards to getting exercising from babysitting and walking the dog… there is only so much exercise you can get from that – not adequate for optimum health. However, this is not the topic being discussed here. Thats all i’m going to comment on your post.
In regards to other’s posts: There are some really good points made and great ideas. I’ve learned lately though that you just have to keep paying as much as you can whenever you can (income tax, extra income if that happens, ect). and just be aware in general of what you spend and think twice, and three times before you buy something you probably don’t need. And with the money you would have spent on that item – put it towards the debt. At the same time, you really can’t spend the rest of your life stressing about the debt that has been created or you’ll waste your life away; just do your best to pay off as much as you can and still enjoy your life. I know I can’t sit here and wait for my School Loan to be paid off before I do things I want to do in life (travel, ect). But, I save up for them – even if its a slow process. Life is simply too short and you never know if youll die tomorrow (and I know its been said 100 times) or even become crippled. So just be responsible and enjoy it to the fullest!
@Jennifer: For one thing, learn about the internet before you go posting comments – all caps generally implies yelling, which I doubt was your intention.
As for the $750 rent – that is *with* a roommate. Clearly, you have never lived in one of the major east coast cities. The unsplit rent, if I were to pay the whole thing, would be $1550, and this is a cheap apartment for this area.
This is a message to all those parents out there (and future parents) who are reading about our kids’ student loans.
I’m 67 now and can look back on what actually worked.
When our kids were very young, they got swimming lessons at the local pool and joined the swim club in the summer (no indoor pools in our small town). When they were old enough, they took all the courses to qualify as lifeguards and swimming teachers. (We figured that teenagers can make more money as lifeguards and swimming instructors than they can at minimum wage jobs.) By the time our kids were of working age, they made a good wage (union jobs). The eldest worked her way through UBC as a lifeguard at the university pool. By her senior year, she had enough seniority to make a good wage and choose her shifts. She also taught swimming at a private school during the summer. By the time she graduated, she hated the smell of chlorine . . . but no student loans.
Important: She didn’t overdo her work hours because she had to keep her grades up. She noticed that students who had to work too much often didn’t take a full course load. University can drag out too long that way, and not be cost effective.
They other thing is: Sure, it’s great for kids to work their way through university. I did. I worked 30/hours a week my senior year and was a dorm counselor for free rent. Later, I was the only student teacher who was working weekends as well as doing my practicum. But when I look back on all that, I regret it.
My parents didn’t help me because they thought I needed to develop independence. But I also couldn’t keep my grades high enough to be competitive in a pre-med program and had to alter my dreams.
So now I believe this: Don’t wait till you die to pass along a share of your net worth, even if you have to work longer yourself. There are two times when our kids need help big time: when they’re in post-secondary education, and when they buy their first place. We can make an airtight case about how they need to learn the value of a dollar, be independent, etc. Trust me. They will still learn all that! Life has plenty of lessons in those departments. This won’t feel like an entitlement program because you’ve raised your child to have job skills and to save. You’ve taught them how to write a resume and coached them through their first job interviews.
You have to cart them around to baseball, football, soccer, dance, whatever, when they’re too young to drive. Why not drive them to swimming lessons and lifeguard courses?
These days, you as a parent or grandparent can also help the kids get started in an online business of their own when they’re still teenagers. By the time they’re in university, they’ll have that as a side income.
As a parent, you have the foresight to equip them to avoid student loans later on. For the kids, swimming and an online business is just “fun.” But you know it’s part of a long range plan. If you can put money in an RESP, great. That will help.
Gift them with the fishing pole and they’ll share the fish with you some day.
Best tip I ever got from a friend was to pay “something” on my student loan EVERY week. Say if your payment is $200 a month, split it up to $50 a week. Most student loans acrue interest daily and the interest amount is based on the time between payments. I gurantee if you make a $10 payment this week and a $100 payment next week, you will see most of it (depending on the amount of your total loan) go towards principal. This is the quickest way to pay it back…trust me!