For years, I felt so overwhelmed by my student loan debt. I borrowed more than my annual salary, and my payments were 50% of my income. Paying off $81,000 in student loan debt was the hardest thing I’ve ever done, and at times, it felt all-consuming. But although I, at times, felt bitter and angry that I let myself borrow so much for school, I’ve ultimately learned a lot from my experience with student loan debt that I don’t think I otherwise would have. Read on for five unexpected student loan lessons you could learn from having this debt.
I’ll be honest: I was pretty clueless about money before I committed to paying off my debt. I wasn’t sure exactly how much I earned, how much I was paying in interest, or even how much I owed on my loans.
When I committed to paying off my debt, I calculated how much interest I was paying per day and compared it to my income. Once I figured that out, I started to calculate all of my purchases in hours worked — the Starbucks run would be 30 minutes of work, happy hour could easily equate to two hours of work.
Truly understanding how much debt I was in, how much I was paying in interest and understanding what I could afford on my income shifted the way I thought about money. I no longer thought of money as this abstract concept, but rather, something tangible that was costing me time. Once I made that mental shift, I had a better understanding of the power of a dollar, and my finances have never been the same since.
I was living on a low income, trying to pay off debt for a long period of time. At some point, I realized I couldn’t cut back any further and knew I need to instead earn more money. I wasn’t quite sure how to go about it at first, so I took any gig I could get. I started cleaning houses, working events, working as a brand ambassador and doing other odd jobs to supplement my income.
I’ve always been a hard worker, but paying off debt lit a fire within me to work even harder. I worked nights, weekends, holidays and early mornings in an effort to pay my debt off sooner. If I was awake, I was probably working.
Though it was tough on me mentally and physically, I learned the value of hard work and perseverance. I pushed myself harder than I would have if I were debt-free. In the meantime, I learned new things, met new people and got out my comfort zone.
But I ultimately did all of those things because I had to. If I had the luxury of being debt-free, I probably would have been stuck in my comfort zone, never feeling compelled to move forward or work harder. Working toward becoming debt-free taught me the value of hard work and how much it could change my life.
Paying off debt helped me learn how to live on less and illustrated the major differences between needs and wants.
I learned how to live on less and without many attachments to material things. I adjusted to living in a small studio apartment with my partner. I found enjoyment from the little things, like taking a bath or enjoying a hot cup of coffee, rather than the next shiny and pretty new thing.
Looking at my income and my debt, my needs and wants became abundantly clear, and I realized I didn’t need a lot to survive or be happy. Many of the things I thought I needed were just wants in disguise. You might think you need the new $1,000 laptop, for example, when a cheaper version would suffice.
Sure, it was an adjustment at first, but learning how to live on less is something that will help my finances for years to come. It’s also shifted my values to treasure experiences, not things.
They say that patience is a virtue — and for the most part, it’s a quality I severely lack. Many people my age have grown up in an environment of instant gratification. If we want something, we can have it now, immediately and on-demand.
Through my student loan debt, I’ve learned the art of delayed gratification and how to accept the struggle of working toward something and how those things make the payoff that much sweeter.
For example, I’ve wanted to move back to Los Angeles and go to Italy with my mom for the past few years. I could have just seized the opportunity and made it happen, but I knew that my No. 1 goal was to get out of debt. Moving to Los Angeles or vacationing in Europe, even on a budget, wouldn’t align with this goal.
So I pushed those secondary goals back while I focused on paying off my debt. It was hard, but I stayed motivated, knowing how great it would be to reach those goals later, once I was debt-free.
Now that I am debt-free, I have plans to move out west and go to Italy this year, which will also be my mom’s first time abroad, While it may not seem like a big deal, I’ve wanted to do these things for years and have held back to continue to pay off debt. Being able to achieve these other goals, without the burden of debt weighing on my shoulders, is that much more gratifying.
Paying off debt, for better or worse, forced me to get real with my money. Debt led me to a financial awakening, where I started tracking my expenses, looking at my income carefully and thinking about my short- and long-term financial goals.
Getting out of debt taught me so much about managing my money and making it work. Without debt, I might still be oblivious and not grasp the financial concepts that I understand today.
What lessons have your student loans taught you?
It’s easy to complain and feel overwhelmed by debt. Getting out of student loan debt is tough, but there are lessons to be learned from the journey that can impact your life for the better. You may have learned a few specific student loan lessons, too, such as how to get rid of your debt as fast as possible.
For today, try to focus on the silver lining. What have you learned from paying off debt that you might not have otherwise?
Andrew Pentis contributed to this report.
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.99% – 6.65%1||Undergrad & Graduate|
|1.99% – 7.10%2||Undergrad & Graduate|
|2.99% – 6.44%3||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|1.99% – 6.43%4||Undergrad & Graduate|
|3.18% – 6.07%5||Undergrad & Graduate|
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1 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of June 23, 2020. Information and rates are subject to change without notice.
2 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Splash Financial loans are available through arrangements with lending partners. Your loan application will be submitted to the lending partner and be evaluated at their sole discretion. For loans where a credit union is the lender, or a purchaser of the loan, in order to refinance your loans, you will need to become a credit union member.
The Splash Student Loan Refinance Program is not offered or endorsed by any college or university. Neither Splash Financial nor the lending partner are affiliated with or endorse any college or university listed on this website.
You should review the benefits of your federal student loan; it may offer specific benefits that a private refinance/consolidation loan may not offer. If you work in the public sector, are in the military or taking advantage of a federal department of relief program, such as income based repayment or public service forgiveness, you may not want to refinance, as these benefits do not transfer to private refinance/consolidation loans.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 1, 2020.
Fixed APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rate options range from 2.88% (without autopay) to 7.27% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Rates are subject to change without notice. Fixed rate options without an autopay discount consist of a range from 2.88% per year to 6.21% per year for a 5-year term, 3.40% per year to 6.25% per year for a 7-year term, 3.45% to 5.08% for a 8-year term, 3.89% per year to 6.65% per year for a 10-year term, 4.18% per year to 5.11% per year for a 12-year term, 4.20% per year to 7.05% per year for a 15-year term, or 4.51% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan).
Variable APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Variable rate options range from 1.99% (with autopay) to 7.10% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Our lowest rate option is shown with a 0.25% autopay discount. Our highest rate option does not include an autopay discount. The variable rates are based on the Variable rate index, is based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of April 27, 2020, the one-month LIBOR rate is 0.43763%. The interest rate on a variable rate loan is comprised of an index and margin added together. The margin is a fixed amount (disclosed at the time of your loan application) added each month to the index to determine the next month’s variable rate. Variable rate options without an autopay discount consist of a range from 2.01% per year to 6.30% per year for a 5-year term, 4.00% per year to 6.35% per year for a 7-year term, 2.09% per year to 3.92% per year for a 8-year term, 4.25% per year to 6.40% per year for a 10-year term, 2.67% per year to 4.56% per year for a 12-year term, 3.44% per year to 6.65% per year for a 15-year term, 4.75% per year to 6.93% per year for a 20-year term, or 5.14% per year to 7.10% for a 25-year term, with no origination fees. APR is subject to increase after consummation. Variable interest rates will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. The maximum variable rate may be between 9.00% and 16.00%, depending on loan term. The floor rate may be between 0.54% and 4.21%, depending on loan term. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
3 Important Disclosures for SoFi.
4 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.19% APR (with Auto Pay) to 6.43% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.43% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of June 15, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 6/15/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.19% effective June 10, 2020.