5 Borrowers Share What Their Student Loans Taught Them About Money

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lessons from student loan debt

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Student loan debt can be scary and stressful — but it can also teach valuable lessons about personal finance.

Instead of focusing on the challenges, I asked borrowers to consider what they learned from having student loans. How has their debt made them better at managing money? What advice do they have for other student loan borrowers in their shoes?

Here are the lessons these five borrowers learned from dealing with student loans — and what they hope other borrowers will learn, too.

1. Budgeting is essential to meeting your goals

Zina Kumok owed close to $28,000 in student loans after graduating from Indiana University Bloomington. With monthly loan payments of $350, she quickly learned she’d need to change her spending habits.

“Before I started repaying my student loans, I definitely had a spending problem,” Zina says. “I would buy clothes I didn’t really need or makeup I didn’t wear. Going to the mall and leaving empty-handed was impossible.”

To take back control of her finances, Zina created a budget and stuck to it. “I learned how to live on less and how to stop myself from buying something unless I really wanted it,” she says. “I really learned how to control my impulses.”

For instance, Zina would impose a 24-hour rule before making a big purchase. More often than not, she’d end up forgetting about the item entirely before the day was done. She also learned to identify her spending triggers.

“I would shop when I was bored or feeling sad,” says Zina. Instead of shopping to feel better, she developed low-cost hobbies. “Right now I’m really into drawing, which is really cheap to do,” she adds. “I also like sewing, which is pretty affordable once you get a machine.”

Plus, she learned the value of a good Netflix session with friends.

“Honestly, hanging out with people is the best way to feel better, especially if you hate your job or are feeling lonely,” says Zina. “I watched a lot of Netflix with friends when I was first paying off my student loans — it wasn’t any worse than having a few drinks at the bar, but much cheaper.”

Thanks to her budgeting efforts, Zina paid off her loans in just three years. Now she helps other young people learn to budget and pay off student debt on her blog, Debt Free After Three.

2. You can save money while paying off student loans

When monthly student loan payments eat up a big chunk of your paycheck, it’s hard to think about saving. But building an emergency fund — and even putting money aside for retirement — can still be a priority.

Clemson University graduate Ciara Hautau learned to build up her savings account, even as she paid off major student debt. “I have made a conscious effort to put half of my paycheck into my savings account,” says Ciara, who now works as a marketing coordinator. “My rule is to not touch anything in my savings unless it’s an absolute emergency.”

Saving so much has not been easy for Ciara, who lives in New York City, one of the most expensive places in the U.S. “Living in NYC and having student loan debt is like having an anchor tied to your ankle,” she says. “Sometimes you feel as if you are drowning, but there are ways to manage.”

For Ciara, the expense-tracking app Mint saved the day. “I started tracking how much I was spending on food, going out, luxury items (such as makeup), gas, etc.,” she says. “Every week, I’d set a percentage of how much I wanted to spend on each of those categories and checked my Mint account frequently to make sure I wasn’t going overboard.”

By tracking her spending, Ciara was able to save while paying off her loans. “Balancing loans and big goals can be stressful and seem overwhelming, but breaking up your goals into digestible benchmarks and developing a plan week by week, month by month can make the process more manageable,” she explains.

Plus, now that she has money in her savings, Ciara is financially protected in the event of an emergency or unemployment. “Not touching my savings provides a huge amount of comfort in case anything should happen with my job,” she adds.

3. Extra loan payments cut down interest costs

It’s tough to make extra payments on your student loans when you could use your money in more fun ways. But if you can make extra payments on your student loans, you’ll get out of debt ahead of schedule. Plus, you’ll spend way less on interest in the long run.

“Snowball your loan payments by throwing as much money at them as possible,” says Jordan Slavik, a University of Maryland alum who took out $30,000 in student loans. “The more you are willing to contribute to your loans each month, the less money you are wasting on interest payments, and the less the interest payments will be each month as well.”

Let’s say you had $35,000 in student loans at a 5.70% interest rate. If you paid $383 per month on the standard 10-year plan, you’d pay $10,998 in total interest. But if you could make an additional $73 payment each month, you’d pay only $8,637 on interest. Plus, you’d get out of debt two years sooner.

“By only paying minimum payments, it may take you five to ten years of payments and thousands of extra dollars in interest payments,” says Jordan. If you’re able to increase your payments — whether occasionally or on a regular basis — you could save on interest and move much closer to a debt-free life.

4. Lifestyle inflation can kill your budget

As you gain professional experience in the years after college, your paycheck will hopefully increase to match. But instead of upgrading your car and apartment right away, consider sticking to the same budget you had right after graduation.

That’s how Kevin Han, the attorney behind personal finance blog Financial Panther, was able to pay off his student debt. “The key lesson I learned from having student loans was the value in avoiding lifestyle inflation,” he says.

“I’ve always pointed out that most people seem to live perfectly fine when they’re a student, but then inflate their lifestyle dramatically once they get their first paycheck … If you can just live like a student for a few more years, you can really set yourself up well financially,” he adds.

By sticking to this principle, Kevin was able to shed his student debt quickly. “I personally paid off $87,000 worth of student loans in just two and a half years by choosing not to live like a ‘big shot’ lawyer,” he says.

By resisting the urge to inflate your lifestyle all at once, you can free up more of your budget to save and get rid of debt.

5. A long-term debt strategy is crucial

Lots of borrowers feel hopeless and stressed about their student debt. And while the challenges of student loans can’t be minimized, it is possible to pay them off over time. After years of barely making a dent in her debt, Adrienne Ross proved to herself she could turn things around.

“By the time my husband and I had graduated from college, we had racked up close to $30,000 in student debt,” says Adrienne. “Fast forward a couple of years and imagine our surprise when we realized that our regular monthly payments had barely moved the balance we owed.”

Although she felt discouraged, Adrienne was proactive about changing her payoff approach and settled on the debt snowball method.

“We decided to jump start our repayment plan,” she says. “We started with the smallest loan first and threw every bit of extra cash we could scrape together toward paying it off. Paying off that first loan felt amazing!”

Once they had that first taste of success, they were motivated to continue. “Each loan that we paid off gave us the excitement and confidence we needed to keep going.”

For Adrienne, the snowball method made her student debt manageable. “Breaking down the process of repaying our loans in this way taught me that I can accomplish anything,” she says. “The key is to break big goals into small steps and track your progress.”

Hopefully, the lessons above can help you get out from under your student loans. Even with a mountain of student debt, every small step will get you closer to financial freedom.

Interested in refinancing student loans?

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1 Important Disclosures for Laurel Road.

Laurel Road Disclosures

  1. VARIABLE APR – APR is subject to increase after consummation. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes.

2 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student Loan RefinanceFixed rates from 3.999% APR to 7.804% APR (with AutoPay). Variable rates from 2.480% APR to 7.524% 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 2.480% APR assumes current 1 month LIBOR rate of 2.07% plus 0.91% 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. 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
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

3 Important Disclosures for CommonBond.

CommonBond Disclosures

  1. Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate DisclosureVariable rate, 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 August 1, 2018, the one-month LIBOR rate is 2.07%. Variable interest rates range from 2.72%-8.17% (2.72%-8.17% APR) and 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 cosigner. Fixed interest rates range from 3.50%-8.69% (3.50% – 8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. 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. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled, must be in repayment of their existing student loan(s) and must make the minimum number of payments after leaving school. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
  7. Average savings based on 18,113 actual customers who refinanced their federal and private student loans through our Education Refinance Loan between January 1, 2017 and December 31, 2017. The calculation is derived by averaging the monthly savings of Education Refinance Loan customers whose payments decreased after refinancing, which is calculated by taking the monthly student loan payments prior to refinancing minus the monthly student loan payments after refinancing. The borrower’s savings might vary based on the interest rates, balances and remaining repayment term of the loans they are seeking to refinance. The borrower’s overall repayment amount may be higher than the loans they are refinancing even if their monthly payments are lower.
2.57% – 5.87%Undergrad
& Graduate
Visit Earnest
2.80% – 6.38%1Undergrad
& Graduate
Visit Laurel Road
2.48% – 7.52%2Undergrad
& Graduate
Visit SoFi
2.47% – 7.99%Undergrad
& Graduate
Visit Lendkey
2.57% – 6.65%3Undergrad
& Graduate
Visit CommonBond
2.72% – 8.17%4Undergrad
& Graduate
Visit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. 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 understand what you are buying, and consult 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. Please do your homework and let us know if you have any questions or concerns.