How I Paid Off My Student Debt in Six Months

It’s been seven years since I retired my student loans. I’ll never forget the mixed feeling of graduating from school with my degree in one hand yet starting a new life with $17,000 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 $19,000. So really, my $17,000 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 loans fast, 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?


Your two cents:

  1. Gigi March 31st, 2012

    Well, I don’t (fully) agree with Jdoe and Josh, who commented below him. I agree that it’s ridiculous (and it’s spelled with and “i” in the second space, unless you were going for emphasis with a long “e” sound…) for people to expect the government to bail them out of something they had gotten themselves into and were expecting. And really classy of you Jdoe to bet those that do that are Democrats. And Josh, you’re just as equally classy to lump it all up to a “rediculous liberal mindset” With that said, markets change. Even though someone chose a field does not mean that four or two or even one year later, that market in your town is where the money will be. Yes, you can relocate. Look how fast things changed for journalism majors. Printed newspapers to Nooks and Kindles. Sucks if you were planning on running your own publication.
    And it’s very good that the job offers are rolling in for you Jdoe, with your Master’s degree behind you and your wife’s impending doctorate degree to boot. We can all see that you feel the plight of a recently-graduated student.

  2. C.B. April 22nd, 2012

    Just thought I’d mention (as a democrat liberal here) that I don’t think the gov’ should bail students out of debt. I’ll be grad. in Dec. with about 10k debt for a two year degree, which I understood getting into it. Hopefully with a computer-related degree I’ll be okay, but it terrifies me I won’t be able to handle the debt. I really don’t like debt. (Hence community college to begin with.)

    I would, however, like to see the gov’ take an interest in just how much colleges are profiting. Community colleges struggle to provide teachers, and privatized institutions of profit pay CEOs (“deans”) insane amounts while charging students sums that require loans… some degrees are only offered in such places, though. Our community college has only some degrees offered, so some people with this large amount of debt wouldn’t have had other choices in their area (beyond just not going or getting that degree, I mean).

    Just thought I’d toss that out there for all you “boo-hoo democrats don’t wanna pay back loans” types.

  3. Sue May 4th, 2012

    I graduated last year with 100K in grad school debt and have paid off almost $60K by now by making serious sacrifices and being a mature, responsible adult. I knew that getting an Ivy League graduate degree is a long-term investment and that it will be a few years before I get an actual monetary return on it, but it made sense to me and I don’t regret the choices that I have made. It is awful to have 100K in debt hanging over your head, but it is also great knowing that every month, the loan balance goes down and when it is all gone – I would still have a great degree and a solid income that I can spend on the things that matter. Here is how I am doing it:
    Before graduate school:
    – I researched starting salaries, average debt at graduation and other relevant statistics for my program and only applied to schools were the average graduation starting annual salary was at least as much as it cost me per year of grad school.
    – I busted my behind at school so that I can get the best offers I could, and then negotiated, negotiated, negotiated. I negotiated a signing bonus and relocation and as soon as I got those checks – they literally just passed through my checking account and went towards loan repayment – starting with the highest interest loan first. Same with my tax rebate. If it doesn’t stay in your account, you don’t spend it on anything but your loans.
    – I found the smallest apartment that I could, bought the cheapest furniture I could find (and as little of it as possible), shopped at discount retailers like Khol’s, Nordstrom Rack and Daffy’s for my work clothes (never pay retail for clothes), and even negotiated with my internet provider. I didn’t buy a TV because that would make me want to get cable – and trust me – you can live without cable and save a few hundred bucks right there. There are plenty of shows on Hulu. And they are all free.
    – I budget religiously and have realized that most things are a luxury and not a necessity – I get my nails done at home and that alone saves me at least $25/week. I bring lunch to work a few times a week and even bring my mug of coffee from home since the coffee at work is gross but no way am I paying $2-3/day for a cup of Joe. Do the math on that one.
    – By now, my friends all know that I am on a budget and even though we all make good money, no way am I going to join them for dinner somewhere were my bill will be $50+. People respect that. When I go drinking with friends – I get one drink and make it last.
    – I run outside and save $$$ on the gym.
    – I pay down my credit cards off every month – and only use them as needed.
    – I max out my company contribution to my 401(k) even if it means that I am paying a little less on my loans in the short-term. That is free money that will accumulate in the long-run and is worth maxing out.

    Is doing all this fun? Absolutely not. Do I ever want to cheat? Absolutely. But is it the right thing to do and worth the short-term pain? Yes.

    And when my debt is all paid off, I am pretty sure the habits that I learnt by being responsible and living below my means while aggressively paying off my debt will also be the habits that will help me save for retirement and everything in between.

    No pain. No gain.

  4. Scott May 8th, 2012

    Way to go, Sue!!! You are to be commended. I already have some ideas along these lines, but I’m curious to know what resources you used in researching starting salaries based on schools attended etc… Can you share?


  5. Sue May 9th, 2012

    Hi Scott,

    I went to business school so pretty much all business schools publish the annual reports with % of students who went into a specific field, what the average starting salary and bonus are, what are the ranges etc.

    I also found and to be useful in giving me an idea of what positions that I might be interested in within specific firm pay. Looking at the firms where I have worked that have data on those websites – I think it is fair to say that their ranges are fairly accurate.

    I also reached out to the career center with specific questions on recruiting – companies that come on-campus, positions that they are recruiting for (since this could be materially different) etc etc.

    Hope this helps and best of luck. The first two months of budgeting were brutal but now it feels so good to see the loans disappear one little bit at a time. Oh, also, while in school, I was very responsible and unlike a lot of my classmates who took 10K extra in debt just to go on vacations, I stayed in during Spring Breaks and borrowed less.

  6. Bethany May 11th, 2012

    First of all, I totally agree with the stop whining aspect of your post. It seems a bit ridiculous that they HAD to get a car, or HAD to stay where they lived because they just bought a house. My fiance and I have around $75K in debt together, but honestly I’m not that worried. Yes I don’t like debt but we’ve been living in an apt. together with a combined income under $20k. that’s while going to school and working less than 30 hours a week a piece. Plus, my parents claim me on taxes, so I have more than average taxes taken out of my bi-monthly paycheck.
    Now that we’re both working full time at ok jobs ($9 something an hour)I don’t see why it wouldn’t take less than 5 years to pay it off. That’s considering interest. Our plan is to live off one of our paychecks and pay loans with the other. We’re not going to buy new cars, we pay $30 a month for virgin mobile and we don’t have cable (what a waste!)
    Yes, I understand not everyone has someone that they can do this with, but those of you who do, I really don’t understand how it’s taking you so long. Sorry, just don’t.
    But my second point jdoe is that I really take offense to the Democrat comment. I’m a democrat, not that I always love our side, but hey it’s where I fall. However, I don’t think it’s a good idea to have the govt. forgive all our debt. I can just imagine where that income would hurt other sectors! HORRIBLE idea! It wouldn’t hurt to keep low interest rates, but it’s my debt, I’ll deal with it. Still, just ease off on the political remarks please? I’ve heard quite a few republicans who hate losing their tax breaks even though they complain about the national debt. Just saying.

  7. Al June 8th, 2012

    Hello everyone,

    Very interesting posts. I also had 68K student load. I managed to paid off in less than 2 years. My parents did not help me at all. I think it’s very important to choose you future job carefully. There are a lot of excellent trade jobs,
    The feeling of having no debt is amazing, I just can’t imagine having mortgage for 20 years.
    Good luck everyone,


  8. Dallas Realtor July 12th, 2012

    Interesting article which I have passed along to my friends who also graduated with student loan debt. Even five years post graduation, I’m not sure they’ve made a dent in the debt. Thanks for the useful information!

  9. Ciara July 17th, 2012

    I’m beginning my 2nd year of school and already have $50k in federal student loans. Sometimes it’s a little overwhelming to think about.

  10. KT August 18th, 2012

    @Lao – you asked if you have the extra $ to pay, should it go toward the interest or the principal. Whether it is a loan or a mortgage, definitely put it toward the principal and make sure it is noted when the payment is made.

    To those approaching retirement in the U.S. and are delinquent in student loan payments, the government will reduce your monthly Social Security amount to go toward paying off those delinquent student loans. Just the other day I read a very interesting article about the high number of people close to the age of 62 who are delinquent in making student loan payments. I looked unsuccessfully for that article online, but found this instead:

    The original newspaper article indicated that student loans are not cleared with bankruptcy. And I think it is irresponsible for posters to suggest taking private loans to pay off student loans, then declare bankruptcy to escape the private loans.

    I got my education on the “pay as you go” system. Worked part time while going to school full time for 2 years. Left school and worked full time for 4 years, then returned to school full time. Needed to borrow a small amount toward the end. Had no difficulty paying it off.

    I’ve lived that way all of my life and have had a fruitful and satisfying life. Now in retirement, instead of drawing from our retirement accounts, we continue putting money into our savings account monthly. Neither hubby nor I have had high paying jobs. We would probably have been considered upper middle class.


  11. Alice October 28th, 2012

    My bank forced me too sell my investment funds. So suddenly I had a huge sum dropped on top of my head.

    I checked with the student loan central of sweden, and I realized that if I paid this very sum extra at once when I get my degree, it won’t do very much. If I instead divide the sum into 25 equal parts (or fewer) that I’ll pay extra each year… THEN we’re talking! from taking 25 years to pay back, it would be closer to 15. I find that very strange.

  12. Emily January 12th, 2013

    Hey Kerry!

    Thank you so much for writing a CANADIAN financial blog – my friend recommended you and I am most grateful!

    I need some advice, though – what do you recommend for students coming out of school who are being offered contracted positions? I graduated from an HR postgrad certificate program in 2009. It’s taken me this long to return from teaching overseas and working a retial job to finally land a job in my field.

    While I love my job, it pays $14/hour and is a month – to – month contract. Do you have budget, loan payment and financial planning suggestions for the the contracted ‘new’ grad?

    Thank you!

  13. Karen February 23rd, 2013

    Great advise but different folks have different needs, I worked for the US. Army Ten years never paid for my college, I worked for the Federal government now for 15 years they are not paying for my student loans would not let me do intership for school credits because I was an employee, I graduate with a Master Degree Paralegal in April 2011 debt $97000.oo, I can not move in with parents as they have both pass on, I can not move in with sisters has they also are struggling and trying to provide for grandchidren. I am paying what I can pay on my student loans and my husband help pay for the mortgage, food, utilities, gas, insurance, car etc. I have been sending out resume since 2004 trying to get a paralegal job with the government but they are always given to someone else, I am willing to relocate if necessary but just because you have the degree it is hard to get experience as I have experience in Social Security Disability Law but if you try to get additional work they expect you to have experience in the area of law they practice but do not offer internship and even if I did take a job working for a private practice attorney would get half of what I am now making so that is a no go. I spend only what I need live like a pauper as I never really had money for extra anyway but I am not going to live on beans and hotdogs, rice and oats, I love food and I have a health appetite. I pay for insurance and the co pay for doctor visit but have a difficult time paying for all the testing, surgerys and procedures required as I have poor health which the doctor won’t diagnosis just keeps giving me pills which as a family we spend $700 for medicine after the insurance pays. I will be paying until I am 80 years old, as far as tax credit you only can claim the interest you paid, same with medical bills you can only claim what you have actual paid over the a certain percentage. You might be saving money by doing your own shopping and fixing your own meals but they people that work in those restaurant depend on people eating there for their wages so either you help support them that way or if they become unemployed then we have to support them through unemployment insurance, so you are still paying the difference through taxes. I shop at the 99 cent store so that I can afford meat for when I get hunger later, I eat breakfast out sometimes and I eat lunch out everyday but I eat at the cheaper restaruants like rally, BK, McD. I do not shop at Walmart because I do not support their business practice are the way the treat their employees I would rather drive 75 miles in the other direction that buy something at Walmart. I buy my clothes at the Salvation Army so I am not living above my means but I can not pay what I don’t have. I do not use credit cards so I do not have credit card debt but I do have medical bills and student loans and I will be in debts until I am 80 years old.

  14. Minnie March 4th, 2013

    I will be graduating with 80k in debt. If I can’t get partial loan forgiveness, then I’ll just jump off a bridge.

  15. KT March 5th, 2013

    I watch the TV show “Princess” where Gail Vaz Oxlade works with young adults who are irresponsible spenders. I was absolutely stunned to hear that those who owe student loans used the $ to fund “fun trips”! I would never, EVER have thought of doing such a thing!

    Sorry to go off topic.

  16. No March 28th, 2013

    I don’t know how you managed to do it but I have a job that pays almost $3000 after taxes and if I spend NOTHING at all. Not even a penny. I would not be able to pay $17,000 off in 6 months. $3000/mo after taxes is also a lot for new graduates.

  17. Alice March 23rd, 2014

    In Sweden, it’s usually not really possible to continue to live as a student after your graduation. This is because a lot of people live is student apartments, so to speak: Dormitories or shared apartments where you can live as long as you are a student, but not any longer. Tax breaks do not work as sneaky in Sweden as in Canada either. But otherwise it sounds like a great idea, even it probably take a couple of years instead of a few months.

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