How I Overcame $32,000 of Student Loan Debt in Less than 18-Months

It should not matter how much an institution actually costs considering there are a multitude of reasons a school becomes the right fit for you, but it’s important to think about how student loans can negatively affect potential outcomes from happening. For starters, it is critical to learn the terms associated with your loans, and for you to recognize the differences between each classification.

1. Grace Periods – With this system, you have six months to begin repaying your student loans once you graduate, leave school, or fall below half-time enrollment. Accruement on your loans will occur if you did or did not graduate college.

* However, grace periods only support subsidized loans. This is should be recognized when you are either in the route of requesting a loan to attend school, or you are beginning to go through the grace period process.

2. Subsidized Loans – For undergraduate students only! The federal government disburses this money based on financial need by each student, and assists in paying for your interest on these type of loans when you are in grace periods, deferment, or in school at least half-time.

3. Unsubsidized Loans – The federal government does not look at a student’s financial need when providing these particular loans.

* Interest on these loans do not follow the same rules that subsidized loans use; unsubsidized loans accrue interest as soon as the money is disbursed to the school that you are at. This means that interest begins to pile up on top of the original amount the moment your loan touches the school’s hands.

4. Private Loans – These loans are disbursed by banks, credit unions, or other lenders. These form of loans fall under a similar category as an unsubsidized loan in that they begin to accrue interest right away, but are not subject to the federal government.

* Be aware with this before considering taking a private loan. Private loans could have a fixed interest rate (it remains at the same rate throughout the span of paying the loan back) or it could also have a variable interest rate (it can change annually based on inflation & other issues). Private loans also ignore deferment or grace periods; you must pay back your loans right away.

5. Principal – The original amount you owe/borrowed when taking a specific student loan before any interest or fees accumulate.

6. Interest Rate – A percentage of the unpaid principal amount that is added to your loan on a daily basis. THIS IS IMPORTANT TO UNDERSTAND HOW INTEREST CAN HURT YOU IF YOU DO NOT REALIZE WHERE YOUR MONEY IS GOING!

* When going through a monthly payment method, interest added to the loan is paid off first before taking on the actual principal itself. If you do not put down more than the interest added to the principal, you are not helping yourself.

7. Deferment – Temporarily stop making federal loan payments. Remember, unsubsidized loans will still add interest to it daily even during deferment periods, and private loans will not be halted at any given period.

Now that we have some of the terms out of the way, I’m going to share with you my experience on how I paid off $32,000 of my own student loans in less than 18 months. I don’t recommend following the same exact methods I used to pay off my loans since your situation could be different than mine, but I hope you learn that there is always a way to overcome debt fast. The vocabulary from the descriptions above will be included in the details below, so try and become familiarized with them in order to understand what I mean when I say certain things.

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I made myself intrinsically motivated to pay off my loans. It didn’t take me until I saw how much interest was already accumulating on my student loans that I decided to become vested in depleting them for good. I graduated (a semester early) in December 2015 from East Stroudsburg University. When I looked at my loans in March 2016, I saw that my one loan already accrued close to $2,000 in interest. This was because that specific loan was unsubsidized, had a 6.8% interest rate, and already started off as an $8,500 loan. From that moment, I used the following methods to tackle my student loans:

1. I kept a note in my phone that showed me how much left I had to remain motivated

When I noticed that I had two larger loans with greater interest rates on them as compared to the rest of my loans, I began to only distribute my funds towards them. By doing this, I was able to not only lower the total on these two loans, but I was also able to scratch off a bunch of interest that Sallie Mae projected me to have.

The two loans I began to pay off had interest rates of 6.8% and 5.2%. These, in particular, are lower than the average student loan rates for most students (I understand this), but I realized that it made more sense to get rid of loans with higher interest rates than getting the satisfaction of paying off others first. It may feel great to see a loan disappear, but when you’re thinking of how student loan interest adds up daily, you want to have a long-term mentality.

2. Whenever I received birthday gifts or other money forms, I would pretend I never got them in the first place

I think a lot of how I am financially is due to my Nona (Italian for Grandmother). She grew up as a young adult during the Great Depression, and was always the type to save everything. For my graduation, she gave me a generous gift and told me to use it however I wanted to as long as it was a smart choice. In my case, I put all of it towards paying off one of my loans. This helped me with slowing down my required monthly payments, the interest being added daily, and supported my intentions on getting rid of my debt quicker.

3. I balled on a budget…. Literally!

Here’s a list of things I did in order to keep my costs down as low as possible:

I lived with my parents since they allowed me to stay with them rent-free after graduating. I am truly grateful and fortunate for everything my parents have done for me, but letting me stay home rent-free after college is likely the greatest deed they have done. I know that everyone isn’t in the same boat as I am with being able to live rent-free, but there are options to think about before rushing into buying or renting a new place.

- Do you really need to move to the city because all of your friends are doing it?

- Is it that big of a deal if your commute is an extra 20-minutes both ways when you could be saving hundreds on your monthly payments?

- Do you really need to have a multiple bedroom house or apartment if you are barely there half the time?

The only bills I had to pay for at times were certain grocery items (like milk or dog treats) or general necessities such as gas and insurance. This was one of the harder aspects to overcome because it is too easy to buy things without even noticing. Going to your local convenient store to pick up a cup of coffee may only cost you $2.00, but think about all of the other small purchases you make in a month. It probably adds up more than you expected it to be, which all of that money could be going towards your monthly payments.

I drove a car that was probably not supposed to be functioning! I had a 2004 Chevy Cavalier. The paint was chipping away, there was rust around the base of the car, the steering wheel was ripping apart, the car had close to 120,000 miles on it, and the air that came out of it stayed at the same temperature. If you’re stuck in a situation where you have to purchase a newer car since your car is on the brink of breaking down, think about buying a used car instead of a new one. You should also finance it instead of leasing the car if you are able to afford it at that point.

I avoided going out to eat at places that are absurdly expensive for no reason at all. Luckily, my fiance Lizanne is a gem for loving mom-and-pop diners just as much as I do. We could get a full meal for the same price as a pair of appetizers at some of the popular restaurants in our area. To this day, we still prefer going to diners when we’re going out for a casual meal.

4. I constantly researched how to pay off debt faster before going on my social media pages.

After countless hours of figuring out how other people accomplished near impossible feats, it came to my realization that I had to pay off my unsubsidized loans before the rest of what I had. Of the four unsubsidized loans I had, two of them were my largest loans with the highest interest tagged to them: The one was an $8,500 loan with 6.8% interest while the other was a $5,500 loan with 5.2% interest.

This is something that you should become accustomed to as well, unless you’re using your social media pages to talk about this topic. The more you learn about paying off debt, the better probability you’ll have of actually getting rid of it all. You’ll also improve your mindset when it comes to impulse purchases. Once I became focused on paying off my loans and remaining well-versed in how it all works, my ability to budget started to improve tremendously.

5. I made it a point to let my friends and family know that this was a goal of mine

When people closest to you understand why you may not be able to go out on a Friday night, or can’t take up that lunch date, it makes things that much easier. When I started coming to the end of paying off my loans, I began to see those around me acting differently… like they were in awe that something like this could actually happen.

Since I paid off my loans, my brother took the initiative to pay off all $20,000-plus in his student loans, my girlfriend paid off her entire $27,000 of debt, and my girlfriend’s brother put down $60,000 (yes, $60,000!) to bring down his payments & annual interest significantly. I knew that I was on my way to making my life better, but I didn’t realize the impact it was having on those who I care for the most. If you take the steps to become debt free, you’ll begin to notice that those around you will follow.

6. I paid part of my student loans off every other week (bi-weekly), and put my money directly towards my targeted loans

Remember this simple concept: Principle before Interest. By paying bi-weekly rather than monthly, more of your payments will go towards the principle rather than the interest. This means that not only will you pay off your loans quicker, but you will be saving a bunch on having less interest over the span of your loans’ life.

This may seem difficult for some people at first, especially if your work pays you once a month or most of your bills fall under a certain time period, but figuring out a way to consistently pay your loans off bi-weekly is a smart move. For instance, if you plan to put down $300 a month on your loans, spread it out across two payments of $150.

The second part of this is just as critical as the first. If you were to go into your account to pay off some of your debt without verifying where you wanted your money to go, your money will be spread out across all of your loans. Don’t do automatic payments; make sure you go in every time you put down a payment to verify that you are putting it towards the loan you wish you get rid of right away. Interest may add up on your other loans, but when you look over the long-term, you will be saving a significant amount of money you shouldn’t actually owe.

7. I used deferment to my advantage, and it helped me shape my career into what it is today

Going back to Numbers 2 & 5, I paid off most of my unsubsidized loans first for this very reason. I knew that if I had to ever put my loans in deferment, interest would still accumulate for any unsubsidized loans I still had.

A few months after I graduated from East Stroudsburg University, I knew right away that I wanted to pursue a master’s degree, but I wasn’t willing to chalk up another $30-plus thousand in loans on top of still paying off the rest of my undergraduate student loans. The only way I planned on going for a graduate degree was if I was able to go for free; which lucky for me, it happened.

One of the greatest benefits of working in higher education is that most institutions provide full-time employees the opportunity to pursue free education at the undergraduate and graduate levels. While I was at Gwynedd Mercy University as an admissions counselor, I was able to take on coursework in my MBA without having to pay a dime just three months into the job. Additionally, I was able to put my undergraduate loans in deferment since I was technically back in school. When I did this, I only had two unsubsidized loans left to pay off, one being $1,000 with 3.2% interest, and the other one being $2,500 with 4.4% interest.

Since then, I've been able to receive my M.B.A., and now I am currently enrolled in my Ed.D. at Widener University. I will be talking more about my educational route in blogs down the road, so stay tuned!

8. I had a long-term mindset, but with a short-term mentality. I also made myself uncomfortable, but still within my comfort range

What do I mean by this? Well, think about trying to pay off all of your loans as soon as possible, but realize that you are going to have to be patient about how you go about it. You should have a nice 3-6 month account that you’ve saved up: this is money that you can rely on if something were to happen, such as a layoff from a job. Emergencies happen to the best of us, so make sure you aren’t actually broke when something occurs.

I also realized that if I wanted to pay off my loans faster, I had to chalk up more money every month. This means that instead of being able to go out with friends, or buying those new shoes I really wanted, I had to sacrifice these things in order to overcome debt.

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How has your experience been with paying back student loans? What tips aside from mine can you give to others?