If you’re facing a hefty student loan balance, paying off your debt can feel like an impossible task. However, reading stories about others who have successfully paid off student loans can be a huge motivator, especially when they make a lot of progress within a short period.
How 3 borrowers paid off their student loans in a year
- Inspirational quotes helped her pay off $30,000 in 10 months
- Becoming obsessed with debt helped her pay off $10,000 in 5 months
- Side hustles helped blogger pay off $40,000 in 1 year
Like millions of Americans, Whitney Hansen graduated from college with student loan debt — over $30,000 of it. But thanks to hard work and some serious discipline, she was able to pay off her balance in just 10 months.
What really worked for Hansen, who works as a blogger and financial coach, was putting sticky notes everywhere around her house with inspirational quotes.
“I remember working two jobs, 80 hours a week, to pay off my debt and thinking it would never end,” she said.
However, having those notes around the home kept her motivated and focused on her goal. And after less than a year, she became debt-free, freeing up money to pursue her other financial goals.
If you don’t make a lot of money, paying off student loans in a year is basically impossible. But with some creativity, it can still be done, as proven by Jackie Beck.
Earning just $2,100 a month, Beck paid off $10,000 in student loans in five months. Being completely obsessed with the idea of destroying her debt was the reason why she was able to pay off her debt so quickly.
For years, she sent payments on her student loans intermittently. At one point, they were even in forbearance. However, she grew tired of constantly having the loans hanging over her head, so she got serious about paying them off.
She started tracking her expenses to cut excess spending from her budget to free up more money for payments. Every time she sent in a payment for her student loans, she said she just wanted to send in more and more. She finally knocked out her remaining balance by moving money over from her savings account to pay her loans off once and for all.
Nowadays, Beck writes about debt repayment and even developed an app for aiding the repayment process.
Having money in your bank account can provide you with peace of mind. But if you’re paying interest on student loans — and the interest rates can be quite high — it’s more cost-effective to use that money to pay down your debt.
Michelle Schroeder-Gardner went to college and then earned her Master of Business Administration (MBA). She was responsible for paying for her own education, which meant she had to work various jobs to minimize the amount of student loans she had to take out while in school.
When she graduated, she still had $40,000 in student loans. She also had a good job in finance, but that wasn’t enough to conquer her debt.
Instead, what she decided to do was drastically increase her income through freelancing. It didn’t happen all at once, but her blog Making Sense of Cents allowed her the opportunity to network, meet other bloggers and start a freelancing business.
As a freelancer, she wrote for other blogs as a staff writer, managed other blogs’ content and helped other bloggers with their advertising. Her business grew and grew, until her monthly income eventually moved into the five-figure range.
Thanks to her side hustle, Schroeder-Gardner was able to put several thousand dollars toward her student loans each month. The process wasn’t easy, though — she essentially had two full-time jobs: her regular 9-to-5, and her freelancing business that she worked on during nights and weekends.
However, the hard work was worth it. After paying off her student loans and working for a few more months, Schroeder-Gardner was able to quit her day job and work for herself full time.
Bonus: Working together helped them pay off $80,000 in just 3 years
Luckily, Cothern — who worked as an accountant — and his wife earned a higher-than-average income, helping them afford their monthly payments. However, they were determined to get rid of their debt as quickly as possible, so they came up with an aggressive repayment plan.
They sat down and made a clear budget together. They cooked a lot of meals at home, and they weighed every single financial decision together. If they went on vacation, they used credit card points for their tickets so that all their excess cash went straight to paying off their debt.
Besides budgeting their money, Lance made extra income through his blog, Money Manifesto, and they sold many of their belongings. Because of these decisions, they were able to pay off $80,000 of student loans in just three years.
Even better, their success empowered Lance to leave his day job and become a full-time blogger, helping him achieve his goals.
Managing your student loans
No matter what your income, it’s possible to pay off your student loans ahead of schedule. However, it does take discipline and focus to reach your goals.
The people listed above paid off student loans by making sacrifices, cutting their spending and working extra hours to boost their incomes. With creativity and initiative, they were able to cut years off their repayment terms, helping them save money on interest and become debt-free sooner.
Want to supercharge your own student loan repayment? Consider the following tips:
- Pick up a side hustle: Boost your income so you can put more money toward student loan payments. You could write for blogs, drive for Uber or Lyft, walk dogs or deliver groceries for extra cash.
- Create a budget: Come up with a budget and review your bank and credit card statements to identify spending categories you can cut. For example, maybe skip eating out and brown bag your lunch or find a cheaper cable package.
- Reduce your living expenses: Your rent or mortgage payment is probably your biggest expense. If you can lower your housing expenses, you can put more money toward your loans. Shop for a cheaper apartment or consider getting a roommate to free up more cash each month.
- Refinance your student loans: If your student loans have a high interest rate, you can save money and shorten your repayment term by refinancing your student loans. Just be mindful that if you refinance federal student loans, you can lose access to certain protections like student loan forgiveness, among others.
With hard work, paying off your student loans early is possible. Stick with it even though it’s tough. If you figure out how to pay off student loans in a year, you could be our next success story.
This report was originally published on Aug. 12, 2015.
Kat Tretina 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.