Many of us have been raised with the idea that it’s taboo to talk about money. But sharing our struggles, especially when it comes to student loans, can help us feel less alone.
I spoke with five student loan borrowers about the challenges they’ve faced as a result of their debt. Plus, they shared the steps they’ve taken to reclaim their financial lives.
Although the student loan struggle is real, there is a light at the end of the tunnel. Learn about the obstacles these borrowers faced and what they’re doing to overcome them.
1. My student loan interest just kept ballooning
Monique Prince is a social worker who took out $60,000 in federal loans for her master’s degree. After graduating, she couldn’t afford her monthly payments, so she got on an Income-Based Repayment (IBR) plan.“[This] was helpful because it allowed me to make much lower monthly payments,” says Monique.
“[This] was helpful because it allowed me to make much lower monthly payments,” says Monique.
But she didn’t realize how much interest was adding up each day until her balance got out of hand. “The payment does not cover even the interest accruing,” Monique explains. “My balance is now over $80,000.”
Unfortunately, Prince’s payments are too low for her to make a significant dent in her debt — but she has a plan to make the loans more manageable. “When I am able, I am going to refinance it into a private student loan offered through my local bank,” she says.
Through refinancing, Monique might be able to snag a lower interest rate, as well as ease the burden of monthly payments. Now, she shares the lessons she learned with her friends and clients.
Monique encourages students and families to use tax-advantaged savings accounts so they can take out the least amount of student debt possible.
“[If] your child intends to go to college, open a 529 account to pay for it,” she says. “Let your money grow and compound.”
2. It took me a long time to make big purchases
When you’re paying student loans every month, you might not have much money left over for other expenses. Nicole Firebaugh learned this lesson after graduating from Southern Illinois University in 2015.
“I had a little over $12,000 in student loan debt,” says Nicole. “While that isn’t a lot in comparison to most people, it still has made a huge impact on me financially.”
Nicole was eager to buy a car following graduation, but she had to be patient. “The biggest impact the loans have had on me is my ability to make major purchases,” she explains. “It took me … years after starting to pay loans to feel comfortable enough to buy a new (used) car.
“Even with that,” she continued, “my budget for a car was super tight, as I had to consider my student loan payments along with car and insurance payments when looking.”
Now, Nicole carefully tracks her budget and makes extra student loan payments when she can. “I map out my finances each week and break down payments I have to make each month into four so I can essentially make smaller payments each week,” she explains.
She advises other students to minimize the amount they take out in student loans and to avoid spending student loan money on non-school expenses.
“That one extra night of going out and partying is instantly gratifying … but cutting back a night here and there or finding ways to be thrifty can really pay off.”
By tracking her spending and making extra payments on her student debt, Nicole is moving toward financial freedom.
3. I have to prepare for a huge tax bill
J.R. Duren, a personal finance reporter at HighYa, racked up more than $120,000 in student loans. To ease his monthly payments, J.R. got on an IBR plan. After 25 years of on-time repayment, any remaining balance on his student loans will be forgiven.
But J.R. won’t be totally free of his debt. “Right now, my biggest struggle is figuring out how to pay for the taxes I’ll be responsible for when my IBR comes to an end,” says J.R.
When the government forgives your loans, it often treats the balance as taxable income. IBR offers loan forgiveness, but you could still get hit with a huge tax bill.
If he could go back in time, J.R. would have worked during college and grad school.
“If I could give advice to my younger self and to college students and grad students, it would be this: If you can work, work,” advises J.R. “I know it seems impossible to work full-time, take a full load of courses, and keep your sanity, but that short-term craziness is well worth long-term financial freedom.”
Even by finding part-time work during college, you can reduce the amount you take out in student loans.
4. Student loans made me delay major life milestones
Chris Henjum is the co-founder of Esqyr, a public benefit corporation that provides affordable test prep. Like many other borrowers, Chris had to put off certain milestones due to student debt.
“My student debt delayed significant things in my life: marriage, children, and feeling even close to financially stable,” Chris says.
According to a 2015 Student Loan Hero survey, one in seven Americans with student loans have delayed marriage because of their debt. One in four have put off moving out of their parents’ house, and nearly half of student loan borrowers have yet to buy a car because of their loans.
“The enormous drag student loans place on young people — including the delays in starting a life — is huge,” says Chris. “There is an enormous economic and social price that we’re all paying.”
For now, Chris chips away at his student loans slowly but steadily. And he encourages future students to consider their return on investment when choosing a college.
By prioritizing the ROI of a school — and your college major — you could make back the money you borrow to pay for it.
5. I feel a ton of stress about my student loans
Dave Barr is no stranger to the financial challenges of student loan debt, but he says one of his biggest struggles is the emotional toll.
“The emotional side of student debt is something that really isn’t talked about,” says Dave. “We are more comfortable talking about horrific things we see or watch on TV, but not about these giant obstacles that are causing stress in our lives? And if we are struggling and falling behind, we feel even worse about it.”
Dave wants to break that taboo. He recently started the personal finance blog CommonCents Millennial in an effort to do so. “The best way I have dealt with the emotional toll of student loans is to talk about it,” says Dave. “Raise awareness about how it is okay to be stressed about it.”
Dave shares these challenges with his friends and on his blog. Plus, he advises others about steps they can take to deal with their debt.
“Once I opened up that conversation with a lot of my friends, they said it felt great to talk about it as well,” says Dave. “We were able to help each other out in different ways, whether that be a savings account to use or a loan provider to check out.”
By sharing their experiences, Dave and his friends are able to help each other deal with the stress of student loans.
You’re not alone in the student loan struggle
Over 44 million Americans are dealing with $1.4 trillion in student debt. This financial burden leads people to put off big purchases and delay life milestones. But if we can share our struggles with one another, it might make everyone’s burdens a little lighter.
Ready to get serious about your student debt? Check out this student loan advice from 12 finance experts.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for SoFi.
2 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 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.50% APR (with Auto Pay) to 7.27% 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 April 17, 2019, 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 04/17/2019. 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@example.com, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 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.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
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.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
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 2.49% effective March 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.50% – 7.27%1||Undergrad & Graduate|
|2.50% – 7.12%3||Undergrad & Graduate|
|2.53% – 8.79%4||Undergrad & Graduate|
|2.50% – 6.65%2||Undergrad & Graduate|
|2.55% – 7.12%5||Undergrad & Graduate|
|3.00% – 9.74%6||Undergrad & Graduate|