5 Borrowers on Student Loan Struggles — and How They Cope

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This report was originally published Sept. 11, 2017

Sharing your financial struggles with others may actually benefit you in the long run. With student debt in particular, you might learn from how others tackled their student loan burdens and be able to better manage your own as a result

Student Loan Hero reached out to five student loan borrowers who shared the challenges they’ve faced as a result of their debt, as well as the steps they’ve taken to reclaim their financial lives through refinancing, looking for other sources of income or tracking spending.

Learn from these student loan stories about how borrowers can overcome some common obstacles:

1. Take advantage of refinancing (when appropriate)
2. Keep other expenses low while tackling debt
3. Prepare for potential tax implications
4. Focus on ROI to avoid delaying life ‘milestones’
5. Don’t ignore the potential impact to your mental health

1. Take advantage of refinancing (when appropriate)

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 Prince.

But she didn’t realize how much interest was adding up each day until her balance got out of hand. The payment did not cover the interest accruing and Prince’s balance ended up 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.

What to do

Through refinancing, Prince 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.

That said, refinancing isn’t for everyone. If you refinance your federal student loans, you turn them private and lose access to certain government benefits, like income-driven repayment, so make sure to consider the pros and cons first.

Prince also 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. Keep other expenses low while tackling debt

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.

Firebaugh 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, Firebaugh’s budget for a car was super tight. She had to consider her student loan payments along with car and insurance payments when looking.

What to do

Now, Firebaugh carefully tracks her budget and makes extra student loan payments when she can. She maps out her finances each week and breaks down payments she needs to make each month into four so she can essentially make smaller payments each week.

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.

By tracking her spending and making extra payments on her student debt, Nicole is moving toward financial freedom.

3. Prepare for potential tax implications

J.R. Duren, a personal finance writer, racked up more than $120,000 in student loans. To ease his monthly payments, Duren got on an IBR plan. After 25 years of on-time repayment, any remaining balance on his student loans will be forgiven.

But Duren 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 Duren.

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.

What to do

Just because your student loan payments are low under an income-driven repayment plan like IBR doesn’t mean you shouldn’t try to economize and find extra money where you can.

Duren says a solution he should have pursued would have been working during college and grad school. The additional funds could have been earmarked for the tax bill on the forgiven loan balance — or could even have been used to avoid borrowing so much in the first place.

Even if you feel you can manage your monthly student loan payments, consider a side-hustle to ease your finances.

4. Focus on ROI to avoid delaying life ‘milestones’

Chris Henjum is the co-founder of Esqyr, a public benefit corporation that provides affordable test prep. Like many other borrowers, Henjum 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,” Henjum says.

According to a 2017 Student Loan Hero survey, 35% of Americans with student loans have delayed a marriage talk with their partner because of their debt. From the same survey, 1 in 4 students have put off moving in with their partner, and 46% of student loan borrowers have delayed starting a family because of their loans.

What to do

For now, Henjum chips away at his student loans slowly but steadily. And he encourages future students to consider their return on investment (ROI) 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. Don’t ignore the potential impact to your mental health

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 Barr. “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.”

What to do

Barr wants to break that taboo and has blogged about the emotional toll of student loans to raise awareness about how it is okay to be stressed about it.

Sharing and talking about your experiences could make dealing with the stress of student loans a little easier.

The bottom line: You’re not alone in the student loan struggle

The financial burden of student loan debt not only results in a tremendous emotional toll, but it also leads people to put off big purchases and delay life milestones. If we can share our struggles and solutions with one another, it might make everyone’s burdens a little lighter.

Need help with your student loan debt? Check out our list of resources for student loan help.

Christina Majaski and Brianna McGurran contributed to this report.

Interested in refinancing student loans?

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LenderVariable APREligible Degrees 
1.89% – 6.66%1Undergrad
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2.25% – 6.09%3Undergrad
& Graduate

Visit SoFi

1.99% – 5.64%4Undergrad
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Visit Earnest

1.98% – 8.55%5Undergrad
& Graduate

Visit Lendkey

2.39% – 6.01%Undergrad
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1 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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 October 1, 2020.


2 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.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
  4. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

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 September 9, 2020. Information and rates are subject to change without notice.
 


3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 2.99% APR to 6.09% APR (with AutoPay). Variable rates from 2.25% APR to 6.09% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.25% APR assumes current 1 month LIBOR rate of 0.18% plus 2.32% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. 

4 Important Disclosures for Earnest.

Earnest Disclosures

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 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% 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 July 31, 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 7/31/2020. 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 LendKey.

LendKey Disclosures

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.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 10/15/2020 student loan refinancing rates range from 1.98% APR to 8.55% Variable APR with AutoPay and 2.99% APR to 8.77% Fixed APR with AutoPay.

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.