Student loan debt: Learning to save yourself

In late 2008, Lance Cothern reunited with his high school girlfriend Tori after several years apart. Lance was almost ready to earn a bachelor's degree in accounting, and Tori was a sophomore studying nursing at a four-year public university at the time.

After a few years of dating, the conversations turned serious and they started planning a future together. Unfortunately, unbeknownst to either of them, Tori had a problem that was much bigger than she had ever realized — a lot of student loan debt.

Because of some scholarships and work during school, Lance managed to graduate college debt-free. That freed him up to focus solely on his future wife's debt, which eased the burden somewhat. However, as she pushed through her final semesters at school, they could only watch in horror as interest piled on top of interest to push her total burden up over $80,000.

The piling on of student loan debt

Yes, you read that right. Tori owed $80,000 for a bachelor's degree in nursing. Right about now, you're probably wondering how on Earth that happened.

Unfortunately, it's a lot more commonplace than you might think. In fact, Tori's student loan debt story isn't unlike any of the other tired old clichés relentlessly portrayed by the media: the struggling social worker who ends up 100K deep in student loans, the humanities Ph.D. who is forced to live with her parents well into her 30s, or even Kasey O., the woman I wrote about last year who still owes over $95,000 for a bachelor's degree in media arts and animation.

And just like many others who find themselves in this precarious situation, Tori didn't really know how much she had borrowed until it was far too late. Part of the problem, according to the pair, is that she went to college during the credit crunch, which temporarily made it difficult to access the most attractive student loans. So instead she took out loans with high or variable interest rates, with her largest balance teetering around 11 percent.

“To make matters worse, none of her student loans were subsidized,” says Lance. “That means that her loans were charging her interest the entire time she was attending school. The interest would then be added to the principal of the loan and would incur even more interest charges over the course of her four-year college career.”

Gulp.

Looking for a way out

Just like the many thousands of students stuck in this unfortunate situation, Lance and Tori wanted a way out. They wanted to begin a life together, and they didn't want to spend the best years of their lives struggling under the weight of nearly six figures of debt. After briefly researching income-based repayment and loan forgiveness options, Lance and Tori decided that their best option was to try to get out of debt as quickly as possible so they could move on with their lives. The prospect sounded daunting for sure, but they felt it was the best option they had.

The minimum payments on her student loans were around $700 per month, says Lance. “To pay off our debt, we lived frugally and used a very large percentage of our income to pay off her student loans, sometimes as high as 50 percent or more of our monthly income.”

In an effort to earn more, Tori picked up some extra shifts at work and Lance switched to a less-demanding job with higher pay.

“We had to decide that some of life's conveniences would be put on hold while we paid the debt off,” says Lance. “We didn't eat out often, we didn't have smartphones, we had a very small entertainment budget and we made sure we weren't wasting money on things that weren't more important to us than paying off her debt,” he says. “Student loan debt had to be our No. 1 priority.”

And it worked. In a matter of three years, the two focused almost all of their attention on completely annihilating her student loan debt. And now, in their late 20s, they've earned the right to start their adult lives with an entirely clean slate.

A generation of debt slaves

There's no longer a doubt that student loan debt places an enormous burden on today's young people. With the average student loan debt now over $29,000, it's no wonder that the average Millennial is struggling, and why USA Today recently referred to student loan debt as an entire generation's ball and chain.

“For many 20- and 30-somethings, paying off the cost of college takes priority. Marriage, a house and family will have to wait,” wrote Hadley Malcolm in USA Today, after sharing one of the saddest charts I've ever seen. A few highlights:

  • The percentage of college students who graduate with student loan debt was 65 percent in 2011, up from 46 percent in 1993
  • 1 in 8 borrowers owes more than $50,000 for their education
  • The unemployment rate for recent college graduates was 13.3 percent in 2012
  • A whopping 16.9 percent of adults ages 25 to 34 reported moving back in with their parents in 2012

Note from editors: The Brookings Institution recently published a report that examined student loan debt between 1992 and 2010, and concluded that typical borrowers were no worse off now than they were 20 years ago. Interesting alternate viewpoint based on looking at the data differently…

Refusing to be a victim

But that's what makes Lance and Tori's story so intriguing. Just like so many other student loan debt horror stories, it has all the makings of a segment on the nightly news, but with a twist. Lance and Tori didn't allow themselves to become a pawn in the growing student loan debt crisis. They took control of their situation instead. Here's how they did it (and how you can do it too):

  • They used the debt snowball method. Made popular by Dave Ramsey, the debt snowball method for debt repayment requires you to focus your energy on either your loan with the smallest balance until it is paid off. Then you move on to the loan with the next lowest balance, and so on. “We paid off the highest rate first,” says Lance. “Then we went loan by loan and decided which was most risky due to things like private vs. federal and fixed vs. variable rate.”
  • They focused on earning more. One of the most efficient ways to pay off debt is to earn as much as possible. To do this, Tori picked up extra shifts at work and Lance focused on earning extra money on the side through freelance writing and starting a website, Money Manifesto. You can do the same by finding ways to make more money, whether it's freelancing, dog-walking, or babysitting. The end result is all that matters.
  • They kept their expenses low. Earning more only works if you're disciplined enough not to spend it elsewhere. To put as much money toward their loans as possible, Lance and Tori quit going out to eat and slashed their entertainment budget in half. They also lived a frugal lifestyle and went without many of the modern conveniences many of their friends had, like smartphones. Want to find a way to cut your expenses? Start by tracking your spending to see where your money is going in the first place.

Even though the journey was sometimes painful, the now debt-free twosome is glad they went through it.

“We learned a lot during the process,” says Lance. “We learned that we could be happy even without a lot of money to buy things that many people consider necessities. We learned you have to take action or things will never get better,” he says.

Lance and Tori's story proves that paying off a huge loan is possible, even over a short time frame, if you're willing to make it a priority. And, even though the steps they took might seem simple from a distance, the truth is, they're the only ones that work. It doesn't matter whether you're struggling with a giant mortgage, student loan debt, or credit card debt, the story is the same. Short of winning the lottery, you have to put in the work. You have to go without. You have to be willing to make sacrifices.

One of the basic tenets of GRS (and one of my favorite sayings) is that “no one cares more about your money than you do.” And it's true.

I'd also add that “no one else can save you.”

The painful truth is, sometimes you have to save yourself.

Are you still paying off student loan debt? What is your plan to pay it off once and for all?

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Keith Shannon
Keith Shannon
6 years ago

My girlfriend and I both graduated from Drexel University. I graduated with 70k in debt (my parents paid half, or it would be 140k) with a BS in Mechanical Engineering. My girlfriend graduated with 140k debt with a BS in Microbiology. It’s going to be a very long climb out of debt for us. She actually ended up working for Drexel for a few years after graduating. Unfortunately the pay was only just enough to meet the minimums on her loans. Now she is working at another university while pursuing her Masters degree. The best way to get ahead in… Read more »

Anon
Anon
6 years ago
Reply to  Keith Shannon

This is an honest question, but is there something about Drexel that encourages/normalizes this kind of loan size? Your story is the second I’ve heard recently of high six-figure student loans on degrees from Drexel. (The other was $180K on a graphic design degree with an expected salary ~$35K.) What about a school like UPenn where the tuition is higher but I’d be willing to bet the tuition assistance and scholarship values make the net cost lower for those with demonstrated need? Less competitive to get in would be Penn State where the tuition and fees are still less than… Read more »

Keith
Keith
6 years ago
Reply to  Anon

I attribute it to a lack of knowledge at the time. I knew Drexel was more expensive than some schools but I didn’t realize how much tuition aid I was missing out on. If you compared the tuitions of Drexel and Penn (back then at least) Penn is more expensive. But the reality is like you said, assistance and scholarships are better at Penn, so the average cost is actually less. I chose Drexel largely for the coop program. I figured the working experience would be valuable and that I could use the money earned during coop to help pay… Read more »

Jen From Boston
Jen From Boston
6 years ago
Reply to  Keith

I’ve heard that Harvard and similar schools work hard to get the word out that they can provide major financial aid so while their sticker price is expensive that actual cost in many cases is much lower. But, still, the fact that their sticker price is so high causes many students to not even bother to apply 🙁

It’s also a shame that there aren’t enough advisors out there to help students and families navigate college costs and figure out which college is really the best value.

Aaron
Aaron
6 years ago

Right in the middle of this myself. Started at 80k, down to 60k at 25 and with any luck will have everything paid by my 30th birthday. Keeping expenses low became the largest help this past year. Right after college all I wanted to do was go to concerts and sporting events. Now, if I’m not getting paid to attend as a freelance camera operator I’m not interested.

Vanessa
Vanessa
6 years ago

Tori was lucky she met someone who was willing to help pay off her debt. I don’t think I could make long-term plans with someone with so much debt, nor would I feel comfortable placing that burden on someone else.

getagrip
getagrip
6 years ago
Reply to  Vanessa

Have to agree, they had two people fully supporting each other and both working full time tackling that debt. I’m sure it’s harder for a single person because if nothing else there is no real external support you can rely on.

Holly@ClubThrifty
6 years ago
Reply to  Vanessa

I don’t know. My husband had considerable student loan debt when we got married, and it didn’t phase me too much. We paid the minimum payments forever until we finally got serious and paid it all off. I’m so glad that I didn’t count him out strictly due to his debts. He is the love of my life!

And to be honest, I didn’t mind taking on his loans since I directly benefit from the higher education that caused them.

On the other hand, his debts were nowhere near 80K. If they had been, I might have felt differently.

Ray
Ray
6 years ago

I am a year or two from marrying my long-term partner, who just graduated law school with 180K in debt and no job offers (yet). It has made me anxious to tears on occasion, but my life will always (hopefully) be with him. It has never crossed my mind that he isn’t worth it.

Laura
Laura
6 years ago
Reply to  Vanessa

My son will be a senior in h.s. this year and we are hoping he’ll go to the university my husband works at because he would get a tuition waiver. I’ve told DS that I’d rather he didn’t go to college at all than incur student loan debt. That said, it has crossed my mind that even if he doesn’t incur student loan debt, any future S.O. almost certainly will have it. DH thinks DS will eventually move out, but if/when DS and DSSO are together, I am guessing that moving back in with the ‘rents is a distinct possibility… Read more »

Lauren {Adventures in Flip Flops}
Lauren {Adventures in Flip Flops}
6 years ago
Reply to  Vanessa

I dunno. I have about 50K, but I’m working very hard to pay that off. If someone isn’t interested in me for that reason, then I’m not interested in that person. If mistakes I made when I was 20 is enough to scare someone off, then they’re not someone I want to date anyways.

I do understand not wanting to burden someone else, but really, we all have some kind of baggage in our lives. Some people have massive student loan debt. To me, it’s more important how a person is handling it versus how much they have.

Beth
Beth
6 years ago

I agree! Though I’m in my thirties so massive student loans or consumer debt would be a red flag for me because it suggests that he can’t manage money. (Our higher ed system and credit card rules are different than in the U.S.) I would want to make sure the two of us could work as a team financially.

I’m not going to lie — having one’s financial house in order is an attractive quality in a partner! Although, I think the numbers matter less than the knowledge and discipline to make smart money choices and learn from your mistakes.

TheGooch
TheGooch
6 years ago
Reply to  Beth

I’m one of those people who didn’t get their act together until later in life. somehow that amazing salary that I was going to get was going to make it easy to pay off my student loans. Reality was quite the opposite. I went from hair-brained scheme to hair-brained scheme to painlessly pay off my loan until I came to the brink of bankruptcy. At that moment, I discovered Dave Ramsey’s Total Money Makeover program and the You Need A Budget program . The 2 together plus a ton of reading of personal finance sites turned over 20 years of… Read more »

FI Pilgrim
FI Pilgrim
6 years ago

Wow, great job getting it paid off, but stories like this make me even more glad that I chose an alternative route to college.

Carla
Carla
6 years ago
Reply to  FI Pilgrim

And what route was that, if you don’t mind me asking? 🙂

Ru
Ru
6 years ago

Yay, I love stories like this that show people taking control of their futures! In the UK you don’t have to pay off student loans until you earn a certain amount- they’re lent out through a government agency. When you cross that threshold the money comes straight out of your paycheck with other taxes. You can also get private loans and a student overdraft I graduated last summer with £900 on a credit card. A year later and I’ve got the exact same amount in long term savings, I’ve managed to pay a deposit for laser eye surgery, buy a… Read more »

kathyglo
kathyglo
6 years ago
Reply to  Ru

Why be mortified–you should be proud!!

Vanessa
Vanessa
6 years ago
Reply to  Ru

I remember you, Ru! Congratulations on graduating and nice to “see” you again 🙂

nicoleandmaggie
nicoleandmaggie
6 years ago

We did pretty much the same thing with my husband’s debt, which was unsubsidized at 8%. We probably went a little overboard because I threw up the steak dinner we bought to celebrate once we were done because I hadn’t had red meat in so long my body didn’t know what to do with it. My parents made little enough that I qualified for subsidized loans, which didn’t accrue interest while I was in school. DH’s parents made more, but didn’t save the extra for college expenses, so they took out college loans that just got bigger and bigger while… Read more »

Robb @ Ten Degrees Warmer
Robb @ Ten Degrees Warmer
6 years ago

My story is similar. 43 days ago (yes, I’m still counting in days) I paid off the very last of what originally was $65,000 in debt. Over half of that was student loans. It can be a tough slog, but boy does it feel good to be debt free!

Chuckie G.
Chuckie G.
6 years ago

Good job! I’m right behind you. So are you going to throw a pay-off party?

Robb @ Ten Degrees Warmer
Robb @ Ten Degrees Warmer
6 years ago
Reply to  Chuckie G.

In epic fashion – after going to the World Domination Summit I’m heading off to Bali to start a world tour backpacking trip. I’m a big travel junkie (and have to admit I could’ve paid off my debt earlier if I wasn’t simultaneously saving for this trip) and can’t wait to do some adventuring with the peace of mind that I have no debt payments to keep up with while I’m traveling.

Chuckie G.
Chuckie G.
6 years ago

Hell-to-the-yes! Congrats! Sounds awesome!

Sara
Sara
6 years ago

That editor’s note about the study of how people are “no worse off” with debt really should come with the caveat that that study is ridiculous. Please see this excellent breakdown of the issues with that study, which was done by The Billfold: http://www.theawl.com/2014/06/that-big-study-about-how-the-student-debt-nightmare-is-in-your-head-its-garbage Mainly, the study is of head-of-households, so it does not include students who had to move back home due to debt. It does not include any people who are unable to keep up with their loan payments. It includes heads-of-household ages 20-40, which means that it includes many people who have had decades to pay down… Read more »

Johanna
Johanna
6 years ago
Reply to  Sara

Thanks, Sara. I was going to ask about this.

MBirchmeier
MBirchmeier
6 years ago
Reply to  Sara

The study also notes in passing that they’re concerned with monthly payment on debt while noting that “The average repayment term for student loans increased over this period, allowing borrowers to shoulder increased debt loads without larger monthly payments.”
500/month for 25 years is not just as bad as 500/month for 10 years.

Johanna
Johanna
6 years ago

I’m confused by the timeline of the first few paragraphs. The couple reunited when Tori was a sophomore. “After a few years of dating,” neither of them knew about the magnitude of her debt, but during her “final semesters at school,” they were watching in horror as the debt accumulated. Did Tori take seven years to finish her degree? That’s the only way I see this making sense. If indeed she was able to take on $80K in debt without realizing it, that’s a problem with the system that needs to be addressed with something other than chirpy encouragement about… Read more »

Lance Cothern
Lance Cothern
6 years ago
Reply to  Johanna

We dated back in high school and then got back together her Sophomore year in college. She only took four years to graduate. The summer between her sophomore and junior year we sat down and looked at her student loan situation and figured out she had a lot of student debt. I don’t remember how much it was at the time, but we knew what it was at that time. What we didn’t know, for sure at least, was how much debt she’d graduate with. Interest rates were spiking due to the credit crisis and Tori had to take out… Read more »

karla
karla
6 years ago
Reply to  Johanna

Yes, good advice. But it flies in the face of the reality college students currently face. (full disclosure – secondary business teacher AND I have 2 college-aged children, one with a loan) Anyone who says just work your way through school hasn’t looked at the price of tuition. Anyone who says take the alternative path isn’t paying attention to the statistics which show the bachelor’s degree is this generation’s high school diploma. Just budget and save, while good advice, is no longer enough. While congratulations are definitely in order, how come no one addresses the elephant — namely a couple… Read more »

Holly@ClubThrifty
6 years ago
Reply to  karla

That’s not an issue I chose to tackle in this post, but I agree with you 100%. I was disappointed that the recent legislation that would allow students to refinance their loans at today’s rates was struck down. I can refinance my car if I want, my house, etc. Why don’t students have the right to refinance their loans as they see fit? Of course, that doesn’t solve every problem. Something needs to be done so that students don’t end up in so much debt in the first place. It seems that the system is somewhat predatory, much too large,… Read more »

tas
tas
6 years ago
Reply to  karla

I can get a boat loan for 1/3 of what my student loans are. And the argument that student loans aren’t secured debt like a boat, house, etc. is hogwash. The government guarantees the loans & they (unlike that boat, house, etc) can’t be discharged during bankruptcy). I’m not sure what secured debt is if it isn’t the deal the student loan companies get. I was very disappointed with the most recent student loan debt — it was pushed through with the proud help of my senator, & I’ve been very vocal to his reps about what a bad idea… Read more »

CCH
CCH
6 years ago
Reply to  tas

I’m confused as to why “the argument that student loans aren’t secured debt like a boat, house, etc. is hogwash.” If I don’t make payments on a boat or a house, then the boat or house is repossessed and sold to settle the debt. You can’t exactly repossess an education and sell it if somebody doesn’t repay their student loan. This makes the loan riskier to the lender and therefore the interest rate is higher. I believe this is also a major reason why student loans can not be discharged in bankruptcy nor should they be. That’s how I see… Read more »

tas
tas
6 years ago
Reply to  Laura

@CCH: When the government “guarantees” the loan, it means that if the person defaults, the government will repay the loan (either in full or up to 97%, I don’t remember off hand). That means that the loan company does get the amount they paid back, which is exactly what happens when a loan company repossess (and then sells) an asset.

TheGooch
TheGooch
6 years ago
Reply to  karla

Especially when you have my parents. Who divorced when I was in elementary and encouraged me not to go to college. Why? Their view of higher education was that it was only for snobs, or ‘stuck up’ people. Their advice to me was to get an honest, ‘everyday joe’ job as a gas station attendant and not take on airs.

Carla
Carla
6 years ago
Reply to  TheGooch

@TheGooch – I too was discouraged from pursuing higher education but for religious reasons. I was fortunate to have come of age during the dot com boom so finding good jobs with a now completely (and officially) meaningless Corinthian College piece of paper wasn’t an issue.

I’m making up for it now in my mid 30s…

June
June
6 years ago

This is a great story, but I’d like to see more focus on what students can do while in school to avoid racking up so much debt. I work at an expensive private university and I’m often amazed at the students paying $1000+ in rent to live in the city when they could move a few miles out, get a couple of roommates and pay half that. The figures that colleges quote for room and board are often MUCH more than a student actually needs to live if he/she lives frugally. Many of the students I work with live much… Read more »

Laura
Laura
6 years ago
Reply to  June

Here in Boston, the Globe recently ran articles highlighting a massive problem with student apartments being overcrowded. Essentially, in order to afford the high rents, students take on far too many roommates. Here it is allowable for no more than 4 people who are not related to live together, but student apartments often have more than that. Of course, the rents run a lot higher than just $1K/month. It’s not uncommon to see a 3-bedroom in a student ghetto go for $3K+/month. With 6 students in a 3-bedroom apartment, they’re living as frugally as they’re able. They might find a… Read more »

Jen From Boston
Jen From Boston
6 years ago
Reply to  Laura

And the city has problems with bad landlords who rent out illegal apartments to students. In addition, there’s also the usual issues with lack of maintenance, safety, issues, etc. My bf used to live in a grad student slum in Somerville (another city near Boston & Cambridge) with a number of fellow grad students. I didn’t know him when he was living there, but I’ve heard the stories. And, when one of the last of the original roommates moved out we went over to help her move. OMG the place was DISGUSTING!!!!!! But it was what they could afford 🙁… Read more »

JoeM
JoeM
6 years ago

I graduated in May 2011 with ~$35k in debt from a private university in Chicago. I majored in double useless – History and Classical Civilizations. Cost of education was about $30k a year, but I received substantial scholarships, grants, and aid. After freshman year (07-08) I was financially independent due to recession family issues. Even still, I’ve defied the odds and have been employed full time since graduating. However, a year after working in Chicago, I moved back home to Michigan. That required buying a car, adding about $18k in debt. At 25, I’ve realized two mistakes I made: 1)… Read more »

Ramblin' Ma'am
Ramblin' Ma'am
6 years ago

“Made popular by Dave Ramsey, the debt snowball method for debt repayment requires you to focus your energy on either your largest balance or highest interest rate loan until it is paid off. Then you move on to the loan with the next highest priority, and so on.”

Actually, the debt snowball (at least Ramsey’s method) is exactly the opposite. You pay off the *smallest* loans first. The idea is to keep yourself motivated and build momentum with “quick wins.”

Holly@ClubThrifty
6 years ago
Reply to  Ramblin' Ma'am

You are correct! I wrote it backwards. Sorry about that. I would fix it but I don’t have access to the back-end of the site.

Ellen Cannon
6 years ago

We’ll fix that, Holly!

belleweather
belleweather
6 years ago

I’m not sure she’s making the best choice available here. I mean, it’s her’s to make, but did she consider Pay as You Earn (PAYE) or Income Based Repayment (IBR) as options? It sounds like those would cover some, but maybe not all her loans, although she has the option of consolidating as many loans as possible into the Federal program. IBR or PAYE would limit her payments to 10% (or 15%, reducing to 10% in 2016) of her income over the federal poverty line, and forgive the entire remaining balance after 10 years of on-time payments for someone in… Read more »

Michael
Michael
6 years ago
Reply to  belleweather

Except for the fact that you could be setting yourself up for a massive tax bill down the road with the debt forgiveness 1099-C depending on what your student loans are. Yes, no one knows how the government will handle this, but IBR is not necessarily all its cracked out to be. The public service program on the other hand would have been something worth looking into because that write off is currently tax free.

Amy F
Amy F
6 years ago

In the midst of all the talk on student loan lending, and how young people don’t know what they’re getting into, I will offer this counterpoint that not many people will mention when discussing the topic. Throughout my undergrad and grad years, I was routinely offered substantially more loans than what was needed to cover my educational expenses. And, unfortunately, I took the extra money every time. What did I do with it? I lived beyond my means throughout my 20s. Yes, I avoided credit card debt, but that was because every 6 months or so I got a check… Read more »

Chuckie G.
Chuckie G.
6 years ago
Reply to  Amy F

I did something similar. I convinced myself that enjoying life then was reasonable because of how easy it would be because I would be making so much money later on, I wouldn’t know what to do with it. Sure my professional salary handsomely outpaced my previous jobs, but how foolish I was. This set off an ah-ha moment for me though. I become resolved to never borrow against my future self’s prosperity. I always keep retirement contributions flowing. I don’t take out car loans under the guise of “oh I’ll be making more money next year so stretching a bit… Read more »

Jeff
Jeff
6 years ago
Reply to  Amy F

Yep, had I known then what I know now I’d have paid back whatever student loan money I hadn’t needed once the semester was over rather than stockpiling it.

Adam P
Adam P
6 years ago

“Lance switched to a less-demanding job with higher pay.” Wow. Lance really sacrificed in that, didn’t he? Was that supposed to be “more-demanding job” with higher pay? Otherwise he should be thanking his wife’s student debt for getting him more pay and less stress. Luckily for this couple, nursing and accounting are solid professions with good prospects for employment and steady income. I think I’d do what they did for a few early years then once I’d paid off a good chunk I’d calm down and live my life as normal but with a manageable student loan payment. For me,… Read more »

Dee @ Color Me Frugal
Dee @ Color Me Frugal
6 years ago

This is a great motivational story! We also have a ton of student loan debt that we are working hard to pay off at this point in time! We are also putting up to 40-50% of our income toward debt repayment and expect to be doing so for another 2-3 years until we get the debt gone.

Honey Smith
Honey Smith
6 years ago

How is the wife financing her Master’s degree? Graduate students are no longer eligible for subsidized loans, so even if she’s making sure to take federal/Stafford loans this time, they’re not subsidized.

Keith Shannon
Keith Shannon
6 years ago
Reply to  Honey Smith

I assume this comment is directed at me? She is not the wife just yet, but for all intents and purposes she is. She is taking out the max federal loans she is allowed. She uses all of the extra to pay down her highest interest private loan. She is making the interest payments on all of her deferred loans that are not subsidized and taking advantage of the deferral period to make the same total payments she would make without deferral, but instead focusing it on the highest interest private loan. The goal is for her to finish her… Read more »

Honey Smith
Honey Smith
6 years ago
Reply to  Keith Shannon

I would not have thought of this! Thanks for the additional info.

Juli
Juli
6 years ago

Every time I read a story like this, it makes me so thankful that I did not have to go through that. I chose an inexpensive college route, that was fully financed by my parents and a small amount from me working part time. My husband went to an expensive school, but his dad was a professor there so he got to go at no charge to him. Even though we don’t make a huge amount of money, we are able to live a decent life because we aren’t sending huge sums to student loans every month. I’m not sure… Read more »

Chuckie G.
Chuckie G.
6 years ago
Reply to  Juli

This got me thinking…. One thing I don’t’ see talked about often on this topic is how the millennials, those of us saddled with debt and putting life on hold, will teach our children differently than we were taught. I quite frankly remember having conversations with trusted teachers/advisers who offered trite nuggets of advice such as: “Don’t worry about the loans. Find the best place where you can reach your full potential.” When the time comes I will spin this quite differently. And for good reason………. Colleges are an interesting animal. There is a nearly unlimited money supply as students… Read more »

SLCCOM
SLCCOM
6 years ago
Reply to  Chuckie G.

Go to Podunk U! Work your hiney off while you are there. Nobody cares where you went to school, just what you learned.

And consider trade schools!

Chuckie G.
Chuckie G.
6 years ago
Reply to  SLCCOM

Ehhh not true in all instances. In the world of top tier MBAs, people do give a big hoot about where you went to school. For everyone else, school name/reputation matters very little.

grace
grace
6 years ago
Reply to  Chuckie G.

I was in a similar boat when picking a master’s program. I was lucky enough to be admitted to a number of ivy league schools and taunted with scholarships that were the highest my program could provide (from about a quarter to half tuition, or not much considering tuition is at least $50k a year). Attending the open houses, it was easy to get caught up in the name, the prestige, the opportunities, the beautiful campuses, etc. And the faculty really lay it on thick – “oh how lucky you are! oh what a great, priceless education you will receive!… Read more »

Chuckie G.
Chuckie G.
6 years ago
Reply to  grace

Totally agree on all points, especially the last one about the $100K in tuition to land a $45K/year job. I married a dreamer and I absolutely love her for coaxing me to do things my practical-minded self would never do. However, the concept of ROI is lost on the dreamers. She hit this same situation more or less on the dot. Colleges/Universities charging $100K in tuition for a field where they know graduates will be making $45K is morally reprehensible. Such can only be characterized as a lemon of an education. Interesting to hear your experience with the hoity-toitiness of… Read more »

nicoleandmaggie
nicoleandmaggie
6 years ago
Reply to  Chuckie G.

For strong students with poor or lower middle class parents, the elite school is often far less expensive than the local public school. And provides better outcomes. (Strong students with upper middle class or upper class parents do not reap the same benefits for going to a prestigious school as lower middle class and poor kids do, plus their state options will be less expensive than the elite privates.)

Chuckie G.
Chuckie G.
6 years ago

This drives my middle-class-brought-up self crazy.

nicoleandmaggie
nicoleandmaggie
6 years ago

Why? You don’t believe people with poor parents should get financial aid? I don’t understand.

Chuckie G.
Chuckie G.
6 years ago

That is not what I was saying but my beliefs are closer to everyone receiving the same aid regardless of upbringing.

Such a discussion, however, is mostly political in nature and does not really have a place in the comment section of a blog pertaining to personal finance. It appears that you and I have different opinions on the matter and I don’t anticipate further discussion would change your mind any more than it would change mine. So we’ll just leave it at that and get back to rapping about our joint enemy of student loan debt. Cool?

nicoleandmaggie
nicoleandmaggie
6 years ago

Wait? So you’re really saying that only rich people whose parents can afford it and are willing to afford it should go to Harvard? Even though going to Harvard doesn’t benefit them economically any more than going to a state school would?

While poor smart kids who would get huge amounts of economic mobility from going to Harvard instead of their state flagship shouldn’t be able to go? (Because nobody’s even going to loan 240K in tuition plus room and board for someone whose parents are at poverty line.)

There’s a big difference between equal opportunity and equal treatment.

A-L
A-L
6 years ago

I’ll bite. There are three families, and each of them have a student who got into Harvard. Family 1 has an annual household income of $30k (parents work at McDonald’s), which is considered low-income. Harvard offers their child a full-ride in aid, with $5k of it loans. Child from family 1 gets to go to Harvard, and has to pay back $5k/year. Family 2 has an annual household income of $90k (parents are both teachers), which is considered middle-income. Harvard says they can afford to pay $30k per year, and so Harvard offers $20k in aid ($10k of which is… Read more »

Chuckie G.
Chuckie G.
6 years ago

$6,289.66. That is all that remains. As of today my and my wife’s combined outstanding student loan debt sits at $6,289.66 of what was approximately $160,000 of student loan debt ($55K for me with a business degree, $105K for her with at teaching/language undergrad and half of a master’s). I say approximately $160K because I did not tally up how much capitalized interest hit us upon graduation. I was quite frankly too scared to do so. We anticipate making this a memory in the first quarter of 2015. How did we do it? Through the type of self-denial that would… Read more »

Robb @ Ten Degrees Warmer
Robb @ Ten Degrees Warmer
6 years ago
Reply to  Chuckie G.

One payment at a time, that is the way to do it! Good for you, I hope you are very proud of yourselves. You’ve earned some serious bragging rights! 🙂

H
H
6 years ago

I’m 27, and I paid off the roughly $25,000 of student loans 2-3 months ago that I accrued in college. I saved up during college to pay off all the interest the day I graduated (at 21), and paid about $300-500/month in principal and monthly interest, and gosh, it felt good to finish them off. (For the record I’m on a roughly $25k-$27k gross yearly salary if anyone cares, and with my husband’s salary, we’re on a gross ~$50k yearly salary. That said, we got married kinda recently, so I did most of the work on the student loans by… Read more »

J
J
6 years ago

So I have a slight dilemma, my wife has significant student loan debt, but is working in the public school system. She can get on IBR and pay around $250/month for the next 10 years and have her debt forgiven, paying a total of only about half of the total amount of the loans. Because it would be public service loan forgiveness, the balance would not be taxable. Is it worth it to file taxes as married filing separately for the next 10 years or is it better to just attack the debt and pay it off? Attacking it would… Read more »

Amy
Amy
6 years ago
Reply to  J

For me, a social worker with a good chunk of debt working in a nonprofit, my husband and I are doing IBR. He doesn’t have loans, I do. We filed separately for the first two years of our marriage, but be warned that you cannot itemize your deductions when you do this. So, for us, after we got a great first-time homebuyer mortgage where we get 20% of our interest as a tax credit, we decided to file jointly this year. We’ll see how much it impacts my monthly payment, but it seemed worth it to be able to get… Read more »

J
J
6 years ago
Reply to  Amy

The statement about itemizing is incorrect. You are able to do married filing separately and itemize, but you both have to file the same method of deductions. One of you can’t itemize and the other take a standard deduction.

Benjamin
Benjamin
6 years ago

For those folks who work full-time in the non-profit sector, another option is the Public Service Loan Forgiveness Program–you make 120 payments and the rest is forgiven: https://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service

CV
CV
6 years ago

Got into student loan debt trouble earlier than most – graduated in 2000 with a useless lib arts BA and $75K in debt. This was just for tuition costs – I didn’t borrow for other types of expenses and worked to pay for things like books, housing, food, etc. Yes, I knew they were loans and I had to pay them back, but I don’t think an average 18 year old has a firm grasp of exactly how much money that really is and the impact it has on one’s future (and no one at these colleges wants to enlighten… Read more »

Chuckie G.
Chuckie G.
6 years ago
Reply to  CV

“I don’t think an average 18 year old has a firm grasp of exactly how much money that really is and the impact it has on one’s future”

Amen! Intellectually, one understands what $75K is. However, at 18 one fails to grasp the gravity of the sacrifices required to pay it back later. That was my experience.

Chuckie G.
Chuckie G.
6 years ago
Reply to  CV

So I forgot to ask… how do you plan to celebrate your clearing this insurmountable hurdle?

CV
CV
6 years ago
Reply to  Chuckie G.

The profound relief of finally being free of this anchor is enough of a celebration for me. I’m so far behind on other financial goals because of the resources it’s taken to pay this off that I wouldn’t want to spend any money celebrating.

Catherine Jean Rose
Catherine Jean Rose
6 years ago

Did anybody out there save money between ages 16 – 18 in preparation for college? My 13 year old who dog walks and babysits already has a couple hundred saved. More importantly, she has established financial goals and taken responsibility for her continuing education. My husband graduated high school in 1987, but didn’t earn his bachelor’s degree until 1994. It took 7 years because he would work a year, save, pay a year’s tuition, take a half-load, work, work, work, pay another semester’s tuition. He lived at home while working and going to school part-time. His parents gave him nothing… Read more »

Samantha
Samantha
6 years ago

As a recent graduate, it seems pretty clear to me that a student cannot work their way through college. But I understand that it’s not as clear to those who graduated in a different tuition/economic climate. A quick google searched produced this as the first result: http://www.theatlantic.com/education/archive/2014/04/the-myth-of-working-your-way-through-college/359735/ As the article states with tuition numbers from MSU, “In 1979, when the minimum wage was $2.90, a hard-working student with a minimum-wage job could earn enough in one day (8.44 hours) to pay for one academic credit hour.” … “But today, it takes 60 hours of minimum-wage work to pay off a… Read more »

Yankeegal
Yankeegal
6 years ago
Reply to  Samantha

Respectfully disagree with the not being able to work while going to school. Both of my daughters worked full time while going to school. The eldest while getting her masters in business,(she went nights) and the other while getting her bachelors in nursing. Has nothing to do with minimum wage-more so how hard they were willing to work.

Carla
Carla
6 years ago
Reply to  Yankeegal

Or able to work.

Samantha
Samantha
6 years ago
Reply to  Yankeegal

I’m not entirely sure what you mean, how hard they were willing to work. If working a minimum wage job for 60 hours will only buy you one credit hour, and classes are 3-4 credit hours each, it would take a student 4.5-6 weeks at 40 hours/week to earn enough to pay for one class. Basically, a student would have to work full-time year round to earn enough for *just* tuition, books, fees, food, and housing/room and board not included. Of course, most students don’t work full-time (and I would say, most shouldn’t) and most return home in summer, leaving… Read more »

J
J
6 years ago
Reply to  Samantha

Let me give you a different perspective on working through college. I graduated in engineering with no student loan debt. I had help from my parents, they paid for my car and housing. I paid for tuition and living expenses. Not only did I accomplish that, I had a near $20k surplus at graduation. When I started, I had part time jobs that would pay approx $200 a week to cover my day to day expenses and full time in the summers. I went to a state school with low tuition. I worked alternating semesters at 40 hours a week… Read more »

Yankeegal
Yankeegal
6 years ago
Reply to  J

You are an inspiration!

Sally
Sally
6 years ago

It’s nice to hear a story of taking responsibility for debts instead of whining about how much it sucks to have student loans. I am sympathetic for how crushing it can be. I had loan debt. It was 2.5x my salary when I graduated. The only job I could find was in NJ . It was very expensive to live there, but my hometown choice were McDonalds and Burger King. I did Burger King until I got the NJ job. I am proud I paid off my loans, every cent.It took several years. Every time I wrote a check, I… Read more »

Beth
Beth
6 years ago

Kudos to your daughter! It’s awesome to establish a savings habit when we’re young. My parents had us start setting aside money when we got our first paper route. I had a paper route, then baby sitting jobs, then a part time job in high school (with increased hours during holidays and summers). My university program was too time-intensive for me to work during university, but I had decent part time jobs during the summers and most of my earnings went towards school. At the time, our money went into savings bonds — but that was when interest rates were… Read more »

Catherine Jean Rose
Catherine Jean Rose
6 years ago

It is easy to say, “working your way through college is a myth.” Consequently, these are the individuals who typically fall into the most debt. It is HARD to actually make a financial action plan and stick to it. Here are current numbers for residents in the state of Wisconsin where I live. My alma mater- UW Whitewater – costs $7578/year. Source: http://www.uwhelp.wisconsin.edu/paying/systemcosts.aspx Even earning minimum wage starting at age 16 – one should be able to fund most of his/her college tuition expenses at a reasonably priced state university. Hell, I earned over $7000 per year twenty years ago… Read more »

Cal
Cal
6 years ago

If you’re a nurse with a license, you can apply for the National Health Service Corps loan repayment program. You have to work in an under-served area. My wife applied and received $40,000 toward her debt. You have to commit to two years of working in that area, though.

A Frugal family's Journey
A Frugal family's Journey
6 years ago

Hearing the recent stories of such significant student loan debt, I must admit that I feel blessed to have finished school (Bachelor of Science at USC) with loans totally less than $30K. Even so, with an entry level job and entry level pay, it still took roughly 5-6 years to pay off my student loans entirely. Through my own personal experience, I really feel for student who graduated with 2 or 3 times the loan debt that I had. Hopefully, they had 2 or 3 times the salary!

Emma
Emma
6 years ago

Inspiring! The most disturbing aspect of this story, to me, is the lack of transparency about the loan terms. Don’t ever borrow unless you know exactly what you’re getting into!

Komrad
Komrad
6 years ago

Spend less and make more money. That is what I got out of this story.

Andrea
Andrea
6 years ago

I’m still carrying a student loan balance of a little over $40k at 31 years old (for 2 degrees). While 18 year-old me understood basic math, she did NOT understand how real life would work. Conceptualizing a $500/month payment when you still live at home with your parents is a lot different from actually moving out on your own and paying it back. Once I started a job in my field and paid taxes, commuting costs, rent, utilities, etc., I realized how dumb I was to borrow so much money. My ideas about how much I’d be able to make… Read more »

Laura
Laura
6 years ago
Reply to  Andrea

This. I agree wholeheartedly; no matter how frugal they may personally be, teens in general simply do not have the life experience with paying rent and utilities from their paycheck to gauge loan terms and really understand what it will take to pay it back.

spiralingsnails
spiralingsnails
6 years ago

DH and I are millennials, but we chose to move forward with marriage & 3 kids even while paying back around $80,000 in student loans. How? Living frugally, careful budgeting, and a whole lot of patience; one unglamorous sacrifice at a time. When we first graduated, we were paying about 1K each month out of 3K monthly net pay; as individual loans have been paid off, we diverted those payments to retirement savings, COL increases (i.e. groceries, gas, & rent – not restaurants or vacations), and the new expenses of having kids. We are down to the last $8,500 owed… Read more »

Davey Pockets
Davey Pockets
6 years ago

You do have to save yourself. At the end of the day you have to decide how much money education is truly worth. An ounce of prevention is worth more than a pound of cure!

Melanie@Dear Debt
6 years ago

Congrats! I have paid off $40k in student loans and have another $40k to go. My partner has $60k, although at the moment we pay separately. It’s hard to deal with, but I dream of the day we will be debt free. I’m currently side hustling my butt off to have mine gone in three years. Being at the halfway point is tough, but I know I will get there.

Nursing College Punjab
Nursing College Punjab
6 years ago

I attribute it to a lack of knowledge at the time.To me, is the lack of transparency about the loan terms. Don’t ever borrow unless you know exactly what you’re getting into!

Victoria
Victoria
6 years ago

While I am extremely happy for this couple I ask with ALL sincerity – what does a single person do to pay off debt? I feel like every article I read on here where the person in debt manages to dig themselves out (yes they work hard, they make sacrifices and its AWESOME that they accomplished it) the common thread I see is that they are in a long term committed relationship. So somethings are inherently- easier. Getting a 1 br or studio is half as expensive, groceries for 2 is only nominally more than for 1. Heat, electricity, water… Read more »

spiralingsnails
spiralingsnails
6 years ago
Reply to  Victoria

Um, some of us couples only have one income. Things like health insurance don’t get cheaper just because there’s two of you, and even the basics add up when you are providing them for a spouse & kids as well as your self. Sure being a DINK (double-income no kids) can be the easiest way to burn through debt, but the rest of us can still do it too! And singles have the advantage that you can cut whatever costs you want in whatever crazy ways you want, without having to negotiate it with a reluctant teammate.

Juli
Juli
6 years ago
Reply to  Victoria

Get a roommate? Or several? There are some things that might be cheaper by being in a relationship, but other things are significantly more expensive – especially since relationships often bring kids along. You can easily cut your rent in half. If you want to, cook together so you can share grocery expenses. Honestly, I would be able to save much more if I wasn’t married, as my husband is much more of a spender than I am.

Jane
Jane
6 years ago
Reply to  Juli

Its hard to have a roommate in a studio.

GC
GC
6 years ago
Reply to  Jane

So move. Preferably into a house or condo that is owner occupied. In my experience, the apartment complexes do not care whether you stay or not so the rent increases can be significant. Private homeowners however, usually do not raise the rent too much, as they would prefer a good stable tenant instead of maximizing the rent and having to search for a new tenant regularly.

CV
CV
6 years ago
Reply to  Victoria

I’m $2800 away from paying off my $75K student loan balance and I’ve been single the entire time. I was lucky enough to be able to live with family initially when I graduated because I was unable to afford even the most basic necessities and still make my minimum loan payments. As I gained experience and changed jobs a few times, my income slowly increased. I then spent about 8 years living with roommates. I’m now earning a high enough salary to have my place to myself and am almost done with my debt pay-off, but it’s been a 14-year… Read more »

Beth
Beth
6 years ago
Reply to  Victoria

I think the ideal situation is spouses who are on the same page financially and both high earners. Outside the PF blogosphere, I don’t know how common that actually is!

I know financially successful singles and single income families, and DINKs who struggle financially because one or both aren’t smart with money.

I don’t think we can make generalizations that being married is easier or being single is easier. It really depends on the people involved.

Emily @ evolvingPF
Emily @ evolvingPF
6 years ago
Reply to  Victoria

Please don’t be discouraged in your debt repayment simply because of your relationship status. Being married doesn’t necessarily make it any easier and in many cases it becomes harder – it all depends on the individuals. In my estimation, the only people who experience a sharp decline in per capita living expenses after getting married are ones who weren’t very good at frugality while single. You don’t get access to a second income without getting the second set of expenses. http://www.evolvingpf.com/2012/04/the-truth-and-fallacy-behind-two-live-as-cheaply-as-one/

TheGooch
TheGooch
6 years ago
Reply to  Victoria

Well said! We needs GRS for singles.

SB
SB
6 years ago
Reply to  Victoria

I totally feel what you are saying, Victoria! I pay off the minimum on my loans every month – that minimum happens to be 50% of my income. There is NO extra padding in my expenses and the remaining $45k I have from undergrad and graduate school is going nowhere fast. Meanwhile my work situation requires a car and is far from family who I could live with or get a free meal from every now and then. I do think, even if couples’ expenses are higher, that in general they benefit from S.O. support and consolidation of some costs… Read more »

Jen From Boston
Jen From Boston
6 years ago

I thought this article from LinkedIn would fit in with this post’s theme about helping yourself:

http://www.linkedin.com/today/post/article/20140702183828-9522584-how-a-broke-trip-to-aldi-changed-my-life?trk=mta-lnk

But it also, near the end, points out that after you’ve overcome your financial hurdles it’s time to relax a bit 🙂

PICU MD
PICU MD
6 years ago

I think people really need to view their education as an investment in themselves. i.e. think about what their college will cost and what they will get out of it. I think there is always this mantra of “don’t worry, find yourself in college”. However, now it’s time for payback. For example if your goal is to major in a field that does not generate a lot of income, don’t go to an expensive school. Same thing goes with advanced degrees. if you’re going to go 100k in debt to go grad school don’t do it unless you’re going to… Read more »

Bob
Bob
6 years ago

Wow, I only have to pay 15, 000.
Here in Canada, our student debts is almost always less than yours in U.S. I wish good luck to everyone, since having student debts pleasants, but you will succeed,and I will pray for all of you.

mysticaltyger
mysticaltyger
6 years ago

If Lance and Tori take the money they were putting toward student loans and invest it in a moderately boring mutual fund like Vanguard Wellington (65% stocks, 35% bonds), they can likely achieve financial independence in 17 years and not ever have to work again. Not bad if they keep up the discipline.

See Mr. Money Mustache’s post entitled “The Shockingly Simple Math Behind Early Retirement”
for the details.

http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Lance Cothern
Lance Cothern
6 years ago
Reply to  mysticaltyger

Hey MysticalTyger,

Thanks for sharing! I’m definitely well aware of Mr Money Mustache, although I’m not sure we want to go down the same path they did. It’s early though and we haven’t made up our mind for sure. Thanks for sharing! MMM has a great site for people looking to retire super early.

Lance

hola
hola
6 years ago

I just paid off all my student loan debt. It was pretty straightforward in one way– I found a side job that made about $5000 a year, and did that job for ten years. On the other hand I definitely avoided having kids or buying a house because I was trying and focusing on paying off that debt. Was that a good decision for society to make my incentive to pay a $50,000 loan rather than have a family or buy a home? I know I’m happy to be debt-free and educated, but maybe socially there are better ways to… Read more »

Rosa
Rosa
6 years ago

Our story is much the same. I managed to graduate without debt, despite no parental assistance, but my husband had $40k in debt, in 1999. We took out a separate loan at 6% interest (the student loan interest was 11%), then worked our tails off, and paid it off within a year. He took on a double teaching load as an adjunct. I had a full time job, but also a Sunday afternoon job, and I used all my vacation time to do several consulting projects. We lived on very little money, scraping our expenses to the minimum. It was… Read more »

Alexandra @ Real Simple Finances
Alexandra @ Real Simple Finances
6 years ago

This is very inspiring. Great job, Lance and Tori! My husband also managed to graduate with no student loan debt, but I have more than made up for that. We’re looking forward to the time we can make that last payment to Sallie Mae!

Bob
Bob
6 years ago

Very interesting as usual, thank you 🙂
Student debts are awful, but here in Canada people owe less in general than students living in U.S.A.
Keep up the good work 🙂

Alain Guillot
Alain Guillot
4 years ago

Education should be seeing as a business deal. There are careers that will give you a $100,000 salary and there are careers which will land you a job in Starbucks as a barista. The cost of tuition is about the same. One year of Engineering cost the same as one year of Italian literature, but the return on investment is extremely different. If a person is going to study something that is not well compensated, that person should study part time and do it as the hobby that it is.

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