How to Pay off Student Loan Debt Fast- I Paid off $30,000 in 2 years

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If you’re looking for ways on how to pay off student loan debt, this article talks all about how I successfully paid off my $30k school bill in only 2 years. While these methods worked great for me, everyone’s financial situation is different.

I hate the idea of owing anyone anything. That’s why when I graduated college with my undergraduate degree, I was determined to learn how to pay off student loan debt as fast as possible.

When I declared my goal to my friends and family, there was definitely speculation and doubt from various people that it couldn’t be done. In fact, I was told by many people that it was impossible to pay off student loan debt sooner than the standard 10 years.

I wasn’t convinced.

I thought about making the minimum payments until my bill was paid off, but I felt suffocated by the thought of having debt for 10 or so years. While many people tried to convince me that student loan debt is “good debt”, I still recognized that debt is debt.

I knew that in the near future I’d want to get married, buy a house, travel, and have a family, which would all require money and maybe even some debt. For me, if I wanted to comfortably pursue that life, I needed to have 0 student debt.

Furthermore, my monthly minimum payment for my loans was over $500. At the time with my monthly income, there was no way I could save any money toward my future with a minimum payment of that much money.

Basically, I needed to get rid of all my student loan debt if I was going to comfortably live.

I knew that if I created a solid enough plan, I could work really hard over the next two years to pay off all of my student loan debt.

In exactly 2 years after receiving my first bill, I made my final payment toward my student loan debt. To this date, it is one of my biggest accomplishments (along with graduating from college, of course).

Here is a detailed breakdown of how to pay off student loan debt using the method I did.

First Thing’s First

Before we get started, there are a few things I want to clarify:

  1. I did not take out a Sally Mae loan, which is typically around $20,000. I also did not take out any private loans. All my loans were government based loans.
  2. I chose to pay off my loans as individuals while still paying my minimum payment (more about this later). I credit this method 100% to my success and I recommend it to anyone who has multiple individual loans.
  3. I made sure to tell all my friends and family my goal to put all my money towards my debt so that they would understand why I was being so frugal.
  4. I set aside 75% – 85% of each paycheck to go specifically towards loan repayment.
  5. I qualified for many scholarships during my undergrad, which brought down the cost of tuition. I was then able to take out loans based on my lower tuition amount which is why I only needed to borrow $30,00 for my 4 years.
  6. I mainly used my loan money to pay for my room and board during college. The rest of the tuition my parents and I paid each quarter. (Thanks mom and dad!).
  7. I cut my regular spending to almost non-existent during my 2-year journey. For the most part, I only spent on necessities.
  8. I never once thought about giving up on my goal of 2 years. Whenever I felt frustrated, I thought about the future and how great it would feel to be debt-free.

1. Get Educated on the In’s and Out’s of Student Debt

My very first step was understanding what I needed to know about my student loan debt. The summer after I graduated, I did plenty of research in order to craft my repayment plan.

For me specifically, I had 7 different loans all at various interest rates. I had a few options for how to tackle them, but I needed to decide what was best for me.

Here is some information I learned during my summer of research:

Consolidation

Many financial advisors and school counselors will urge you to consolidate your loans. You’ll see lots of advertisements for companies who specialize in loan consolidation. Here’s my personal opinion on consolidation. Don’t. Do. It.

The only reason I was able to pay off my debt in 2 years was because I focused on my individual loans and paid them off. I started with the loans that had the highest interest rate and finished with loans that had the lowest.

By consolidating loan debt, your interest becomes one. That means your monthly payments go to your interest first and if there is money left over, then it goes to the principle. This is why it takes people 10 years to pay off loans.

By leaving loans as individuals, like I did for my 7 loans, I was able to pay down one loan at a time while still making my monthly minimum payment. Keep an eye out for a future blog post all on my process of paying down my debt. Also, hopefully, the words interest and principle aren’t new to you, but if they are, it’s time to start your research now!

Subsidized vs. Unsubsidized Loans

Did you know that if you have a subsidized loan, you don’t start paying interest until you get your bill? That makes subsidized loans great to have because of that aspect.

On the other hand, unsubsidized loans charge you interest from the moment you take it out. That means if you took your unsubsidized loan out freshman year, you have been charged interest every single day and will continue to be charged interest until you pay that loan off in full.

Interest Rates

I’m sure you know what interest rates are so I won’t get into details on that here. What you may not know is that you have a different interest rate per loan you take out.

My loan interest rates varied from 3.4% to over 10%. Since I decided to not consolidate and just pay off my individual loans (while still paying my monthly dues), I saved up to pay off the loan with the highest interest rate first.

Once I had enough money to pay off that loan, I began my saving process all over again by paying off the loan with the next highest interest rate. Each time I paid off a loan, my monthly payment decreased and so did the interest. This was better on my savings and helped me not have to spend so much on my monthly payment, which began at almost $500 a month.

Deferment

If you cannot find a job within the 6 months or you choose to continue on with your education, you qualify for loan deferment. This means that you will not have to start paying on your loans until you either get a job or you’re done with school.

If you do qualify for a deferment, don’t put your student loans out of sight, out of mind. Save for them so that you can pay them off as soon as possible and live a debt-free life.

With that being said, I crafted my repayment plan based on my loans interest rates. More on that later.

Related: 5 Smart Tips on How to Pay Off Student Loan Debt Fast

2. Talked to a Financial Advisor

For some reason, I assumed that talking to a financial advisor would solve all my problems. I was wrong.

I left the advisors office feeling extremely motivated because I knew the financial advisor didn’t believe I would be successful in my 2-year plan.

I also learned that most people chuckle at the thought of someone paying off their student loan debt before the standard 10 years. It’s just not something that happens often, and as a 21-year-old declaring what my goal was, I probably sounded extremely ignorant.

After my experience with the financial advisor, I learned that if I was really going to be successful, I had to craft a game plan on my own and tune out the opinions of everyone else.

PS. I went back to the same financial advisor exactly 2 years after I paid off all my loans to inform him of my success. The look on his face was priceless.

3. Game Plan

Once I felt knowledgeable, I sat down and established my game plan.

My entire plan revolved around my loans interest rate. Essentially, this was my game plan:

Pay off one individual loan in full at a time, starting with the loan with the highest interest rates, while still making my monthly minimum payments. 

This plan is the only reason I was so successful in my 2-year repayment plan. I 100% credit my success to this game plan. Allow me to explain it a little bit more.

In total, I had 7 loans all at different amounts and interest rates.

Instead of trying to pay off all $30,000, I chose to pay off individual loans in full.

I chose to pay off my individual loans for many reasons:

1. When an entire loan has been paid in full, the monthly minimum lowers.
2. Paying off a loan in full saves you money. Basically, if you aren’t being charged the interest of a loan, you’re saving money.
3. Saving for an individual loan is way more bearable of a goal than saving up for the entire student loan bill.

Once I figured this out, my student loan debt repayment plan became foolproof.

I was able to start saving for the loans with the highest interest rates and knocking them out every few months. By the time I had one more loan to save for, my monthly payment was down to less than $50 and I had literally saved thousands of dollars in interest fees.

I was also only able to do this because I didn’t consolidate my loans.

The only reason I was able to pay off my debt in 2 years was because I focused on my individual loans and paid them off.

By consolidating loan debt, your interest becomes one. That means your monthly payments go to your interest first and if there is money left over, then it goes to the principle. This is why it takes people 10 years to pay off loans.

By leaving loans as individuals, like I did for my 7 loans, I was able to pay down one loan at a time while still making my monthly minimum payment.

4. Decide On Individual Loan Repayment Order

Now that I had my game plan, I needed to decide on the order of loans that I would pay off. This was easy to figure out.

Since I wanted to pay off the highest charging interest rate loans first, I just needed to find out what the interest rate was for each of my 7 loans.

Hopefully, you understand what interest means. Basically, when it comes to student loan debt, interest is very bad. The higher the loan interest rate, the more money you will owe in the long run. That’s why I wanted to get rid of those loans first.

My loan interest rates varied from 3.4% to over 10%. That meant that I would start by paying off the 10% interest rate loans and work my way down.

One important thing to note when dealing with this game plan is that just because I wanted to pay off the loan with the highest interest rate first didn’t mean it was necessarily the smallest loan. For example:

One of my loans was $2,000 at a 3.61% interest rate and another loan was $4,500 at 4.5%.

While it was tempting to just pay off the $2,000 loan when I had enough saved up, I had to stick to the plan and pay of the $4,500 loan because it had the highest interest rate.

It can be difficult to want to pay off a smaller loan when you have the money saved, but if you stick to the game plan and pay off the loans in order of interest rate, you’ll save money in the long run.

5. Summer of Savings

I did not wait until I received my bill to begin saving.

In fact, after I finished paying off my Spring Quarter tuition, I began saving for my student loan debt. That meant I had about a 6-month head start.

That summer, I saved up enough money to pay off the first 3 loans on my list by the time my bill came in the mail.

This was a huge success for me because these loans were costing me a ton of money in interest.

By the time my bill came in the mail, those 3 loans had already accumulated $1,161 in interest.

By paying off those three loans right away with the money I saved over summer, my monthly payment went from over $500 to around $300.

Again, huge success!

Recommended: How to Make a Budget in 7 Easy Steps: A Step By Step Guide

6. Save. Then Pay.

When I say I saved money, I mean I seriously saved money. I was setting aside between 75%-80% of each paycheck specifically for my student loans.

A solid student loan debt repayment plan only works if you are willing to save aggressively. The more aggressive you save, the sooner you are debt-free.

During the two years I was paying down my debt, I gave up many luxuries such as eating out, getting Starbucks, getting manicures, shopping, getting my hair done, and any other costly thing that can add up. Yes, people teased me and called me uptight and frugal. No, I didn’t care because now I am debt free and I can do all those things that I gave up for those two years.

For me, the aggressive savings was necessary and worth it. I could not have made my goal of 2 years if I had not done so. In fact, my aggressive savings taught me many lessons about what I did and did not need in my life.

There was also immense satisfaction when I had saved up enough money to knock out an entire loan.

Once I had enough money to pay off the next loan on my list, I began my saving process all over again by paying off the loan with the next highest interest rate.

Each time I paid off a loan, my monthly payment decreased and so did the interest. This was better on my savings and helped me not have to spend so much on my monthly payment, which began at almost $500 a month.

So, if you want a successful student loan debt repayment plan, you have to be willing to save aggressively. There is no way around it.

Overall Success

2 years from the date I received my first student loan bill in the mail, I made my final payment.

What a relief! I was debt free by the age of 23 years old. To this day, every time I mention to someone they, their jaw drops. They always ask me how I did it, and I explain to them everything I detailed in this article.

If you decide to use my method to pay off your debt, I recommend that you craft a game plan that works for you and your family.

You might want to get it done in 1 year, or 5 years. You might have more or less debt than I did. You might even have one of those private Sally Mae loans of $20,000 in addition to government loans.

Whatever your situation is, you can absolutely succeed in paying off your debt sooner rather than later. All it takes is a solid plan and extreme dedication.

Remember, it’s only temporary. If you ever feel like quitting, just get excited thinking about living debt free. Trust me, it’s completely worth it.

Best of luck to you!

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