How Katie Austin Destroyed $50K in Student Loan Debt

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

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.

Editorial Note: This content is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the financial institution.

student loan debt
Logo

We’ve got your back! Student Loan Hero is a completely free website 100% focused on helping student loan borrowers get the answers they need. Read more

How do we make money? It’s actually pretty simple. If you choose to check out and become a customer of any of the loan providers featured on our site, we get compensated for sending you their way. This helps pay for our amazing staff of writers (many of which are paying back student loans of their own!).

Bottom line: We’re here for you. So please learn all you can, email us with any questions, and feel free to visit or not visit any of the loan providers on our site. Read less

When she graduated from college in 2011, Katie Austin was one of the 44.2 million Americans with student loan debt.

Katie started with about $100,000 in student loans; today, she has $0 in student loan debt. Katie had help from her parents, who agreed to pay half the debt, but she was still left $50,000 in student loans to take care of on her own.

Looking at that number, she wasn’t sure what to do.

Destroying debt is never an easy task. It’s even harder when you live in expensive cities like Los Angeles and San Francisco. However, with a plan, a lot of determination, and the right network, it’s possible to demolish your debt faster than you might think.

Deferred payments and food stamps

Katie didn’t start out with the idea that she would aggressively tackle her student loan debt. In fact, one of the first things she did after graduation was fly to Europe. She was able to defer her payments during that time, but that put her a bit behind.

After returning to the United States, she worked as a temp in Austin, making very little money. Katie didn’t think she could begin paying down her debt in earnest because of her low income. “Then I moved to Los Angeles,” she said. “Things were even worse. I was wicked poor and living on food stamps.”

The first turning point in Katie’s journey to paying off $50,000 of debt was landing a job with Lyft. She worked as a launcher, traveling from city to city recruiting drivers. “I didn’t have an apartment. I had a salary and a per diem. Lyft was basically paying for my life.”

It was then that Katie began making payments on her student loans. Even then, it didn’t occur to her to pay the debt off early. “I just made the minimum payments and frittered away the rest.”

One day, shortly after moving to San Francisco, Katie looked at her loan balances and realized that she had enough money to pay off her smallest student loan. It was only a couple thousand dollars, so she just knocked it out. She increased her monthly payments from $250 to just over $500 a month to pay it off faster.

Then she got a new job with ActiveHours as the communications lead and attended FinCon, an annual conference for the financial media community. It was an eye-opening experience for her. Katie became serious about demolishing her debt and made a plan.

Refinance

Katie’s first step was to refinance her student loans. With her the loans in one place at a single interest rate, it was easier to keep track of everything. It also meant more of her payments went to the principal.

Analyze your budget

After the experience of frittering away her money, Katie decided it was time to analyze her budget. She realized putting $500 a month toward paying off student loan debt was insufficient. Once she looked at the numbers, Katie realized she could put $1,600 toward her debt each month.

That made a big difference. You can pay off your student loan debt quicker by tripling your pay down amount.

Autopay

Next, Katie knew she had to make it automatic. Having her student loan payments on autopay helped her stick to her spending plan. “I figured I’d be too lazy to change the plan,” she said. “It was easier to just decide not to buy things than go in and change my autopay.”

Change spending habits

Katie realized she was spending money on things she didn’t need. Her constant travel while working for Lyft confirmed her love of minimalist principles. But she also realized she could do plenty of other things to cut back on her spending.

She changed her car insurance. Started going to Safeway instead of Whole Foods. Ate out less. Katie even started freelancing to make money on the side.

It also taught her to stick to her goals and priorities. Rather than being tempted for nights out, she learned to say no. “The cool thing about having this major financial obligation is that you have a ready-made excuse,” Katie said. “When people ask you to do things you’re lukewarm toward, you can just tell them you’re paying off your student loans and can’t.”

Utilize her network

The fact that Katie’s parents stepped in to take on half her student loan debt was the biggest help. However, she also had other help.

Katie’s trip to FinCon introduced her to others living the debt-free lifestyle. She learned about the importance of a positive mindset and surrounding yourself with like-minded people. Knowing others were out there doing the same thing buoyed her up and helped her stick to her plan.

Not only that, but her boyfriend also helped. He bought a portion of her debt through WeFinance and didn’t charge her interest. “Once I didn’t have to worry about interest, it really helped me pay it down faster,” Katie said.

Know your end date

Finally, Katie said, it helped to concentrate on the fact that you can live with almost anything for a short period of time. Because she was so aggressive and planned to pay off her debt quickly, Katie knew she would only have to deal with the restrictions of her budget for a couple of years.

“Having an end date was a real help,” she said. “You may have to give up stuff for a year or two, but it’s bearable because you know exactly when you’ll be done.”

What about the buffer?

Katie acknowledged that she was a little uncomfortable at times. She put so much toward paying down her student loan debt that she didn’t build an emergency fund. “I knew I might be screwed if things went wrong.”

On the other hand, once her boyfriend bought her debt, she breathed a little easier, knowing she could make arrangements if necessary. She also said that she felt some confidence that her parents could help if things got really bad – although she didn’t want to go to them.

In the end, Katie got lucky. She didn’t have any health problems or unexpected expenses. However, she doesn’t recommend living as close to the edge as she did. “That buffer is really necessary,” she said. “Sometimes I wish I had built something up.”

After the student loan debt

Katie made her last student loan debt payment early in January 2017. Now, she’s trying to figure out what to do with the extra money she will have each month. “I just got my first paycheck where most of the money isn’t going to student loans,” she said. “I need to figure out what to do with that money now.”

She knows she doesn’t want to just mindlessly spend the money, though. “I want to spend wisely. This money isn’t for shopping sprees and eating out.”

Katie thinks she’ll put a good chunk of it toward retirement savings and other goals, including travel. In order to stay on track, she plans to set goals and check in with her boyfriend. They sit down each month and talk about what they want to do. Then they help each other stay on track.

“Knowing I’m accountable helps keep me in check,” Katie said.

In the end, Katie is glad she took an aggressive stance toward her student loan debt. Now she’s debt-free and she has more options. While she understands that not everyone has the same help she did, she does think it’s possible for most people to pay off their debt with planning and determination.

Interested in refinancing student loans?

Here are the top 6 lenders of 2020!
LenderVariable APREligible Degrees 
1.99% – 6.65%1Undergrad
& Graduate

Visit Laurel Road

1.99% – 7.10%2Undergrad
& Graduate

Visit Splash

2.99% – 6.44%3Undergrad
& Graduate

Visit SoFi

2.39% – 6.01%Undergrad
& Graduate

Visit Elfi

1.99% – 6.43%4Undergrad
& Graduate

Visit Earnest

3.18% – 6.07%5Undergrad
& Graduate

Visit CommonBond

Check out the testimonials and our in-depth reviews!
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.

  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 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).
The Rate will not change during the term. Repayment examples are for illustrative purposes only. The following Fixed Rate examples are based on a $10,000 loan amount using the lowest APR for each application term listed above. All student loan rates used in calculating the examples are shown without the autopay discount (.25%). There are no application or origination fees, and no prepayment penalties. The monthly payment for a sample $10,000 loan with an APR of 2.88% per year for a 5-year term would be $179.15. The monthly payment for a sample $10,000 loan with an APR of 3.40% for a 7-year term would be $134.17. The monthly payment for a sample $10,000 loan with an APR of 3.45% for a 8-year term would be $119.35. The monthly payment for a sample $10,000 with an APR of 3.89% for a 10-year term would be $100.72. The monthly payment for a sample $10,000 with an APR of 4.18% for a 12-year term would be $88.43. The monthly payment for a sample $10,000 loan with an APR of 4.20% for a 15-year term would be $74.98. The monthly payment for a sample $10,000 loan with an APR of 4.51% for a 20-year term would be from $63.32.

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.
Variable APRs and amounts subject to increase or decrease. Variable rates are indexed to the one-month LIBOR rate. The following Variable Rate examples are based on a $10,000 loan amount. Repayment examples are for illustrative purposes only. All student loan rates below are shown without the autopay discount (.25%). There are no application or origination fees, and no prepayment penalties. The monthly payment for a sample $10,000 loan with an APR of 2.01% per year for a 5-year term would be $175.32. The monthly payment for a sample $10,000 loan with an APR of 4.00% for a 7-year term would be $136.69. The monthly payment for a sample $10,000 loan with an APR of 2.09% for a 8-year term would be $113.21. The monthly payment for a sample $10,000 with an APR of 4.25% for a 10-year term would be $102.44. The monthly payment for a sample $10,000 with an APR of 2.67% for a 12-year term would be $81.24. The monthly payment for a sample $10,000 loan with an APR of 3.44% for a 15-year term would be $71.19. The monthly payment for a sample $10,000 loan with an APR of 4.75% for a 20-year term would be from $64.62. The monthly payment for a sample $10,000 loan with an APR of 5.14% for a 25-year term would be from $59.28.

 


3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 3.20% APR to 6.44% APR (with AutoPay). Variable rates from 2.99% APR to 6.44% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loanSee APR examples and terms. Lowest variable rate of 3.21% APR assumes current 1 month LIBOR rate of 0.18% plus 2.82% 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 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.

CommonBond Disclosures

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.

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.