Los Angeles native Andrew Post had every reason to think that law school, even the expensive private school that was his top pick, was a smart investment.
When he applied for schools in 2007, the economy was strong and law graduates were in high demand. But by the time he completed his degree in 2010, “The economy tanked and almost nobody was hiring,” he says.
“Almost none of my classmates got jobs at a law firm, compared to a ton that had from the graduating class a few years earlier.”
On top of that, Post faced over $200,000 in student debt. He put his loans in forbearance to study for the bar exam. Between forbearance and interest rates averaging around 8%, his student debts ballooned to about $250,000 at their peak.
Struggling with $250,000 in law school debt
Post figured the answer to his problem would be to get a high-powered, high-paying position at a firm — but it never materialized.
Instead, he contracted for a solo practitioner. The pay was low compared to his towering student debt and the high costs of Los Angeles living, and varied widely from month to month.
Trying to keep up with student loans on unstable income was a big challenge for Post.
“There were days I had to decide, ‘Am I going to buy gas or buy lunch today?’” Post says. Struggling to pay living expenses like rent, Post moved back in with parents to cope.
Switching careers from law to programming
About two years after graduating from law school, Post’s prospects hadn’t improved. He was no closer to the high-paying firm position he’d counted on to help pay off his law school debts.
During this time, Post tried to get a handle on his student loan situation. He ran the numbers on many possible solutions, from income-driven repayment to Public Service Loan Forgiveness, as he continued to search for a job.
But there were no clear answers. “Everything felt very hopeless financially,” he says.
A friend suggested he consider a career change — he had a bachelor’s in computer science that he could fall back on. And in Los Angeles, the tech sector was booming.
He decided to go for it, studying to refresh his programming skills so he was ready for interviews. After a couple months of searching, he got a programming day job with a stable, higher income.
Getting a money makeover
Shortly after, the Los Angeles Times featured Post in a money makeover series. Post got a free session with a certified financial planner as a result.
Together, they sat down and “talked over everything, all of my financial information, and came up with an actual budget and a plan,” Post says.
Under his new budget, Post lived off about 40 percent of his total $90,000 annual earnings from his day job and some legal side work. The rest went to savings or paying down debt.
To help him stick to a budget, he kept two separate accounts for his monthly expenses: One for fixed costs like rent and insurance and another for his discretionary spending.
“I decided to live very frugally and get as high a paying job as I could to pay down my debts,” he says.
Learning to live on less
Growing up in a well-off family, some of the adjustments were tough. “There’s a lot of learning that you have to do” to live off less, Post says.
For example, when he started cooking at home more instead of eating out, he realized “you have to know a lot of recipes, judge when food is fresh, shop differently.”
But Post followed through. He skipped outings with friends. He commuted two hours a day to keep his $600-a-month rent, a steal for the Los Angeles area.
The sacrifices were worth it. Post put enough toward his law school debt that by the time he’d been out of school for around four years, he’d gotten his debt down to just under $180,000.
The financial planner also helped Post prioritize his overwhelming student debt with other financial goals. He started saving for retirement through his work benefits, contributing up to the full 401k match.
He also set aside a few hundred dollars each month into an emergency fund, with the goal to save three months’ worth of expenses.
Refinancing law school debts saved $10,000 a year
Once Post finally had his finances and student debt under control, he started getting concerned about his interest. Most of his law school debt was Grad PLUS loans, with interest rates ranging from 7.7% to 8.2%.
“Over $1,000 of my monthly payments went straight to interest,” Post had calculated. “It added up to around $15,000 a year.”
Post looked into refinancing options. He found a private lender willing to offer him 2.75% interest rates, a third of what he was paying on his PLUS loans.
In all, the switch saves him about $10,000 a year in interest, extra money he’s using to pay the principal down even faster.
The refinancing loan also offered unique terms: Monthly payments would be amortized over a 30-year period. The loan only lasts ten years, however, with any remaining balance due in full when it ends.
Post kept paying extra toward his student debt, averaging around $2,500 a month. So far, Post is on track to pay it off in about 8.5 years.
If needed, however, he can make the minimum monthly payment of around $600 a month.
Facing unemployment, panic-free
It turns out Post has needed to fall back on the lower monthly payments. At the time we spoke to him, Post had just been laid off a week earlier and is currently unemployed.
While it’s not ideal, Post isn’t panicking. With the emergency fund he’s saved and the option to scale back his student loan payments, his finances are still under control.
“At first I was nervous about dipping into several years of savings,” Post says. But mostly he’s grateful that he’s still financially secure and can wait for the right offer.
“I realized that by being careful with my budget, I invested in making sure my next job is something that I’m happy doing.” Post is still benefitting from his career switch, he adds, and is confident that he’ll have plenty of new opportunities open to him.
This hard-won freedom is what Post says he is most proud of.
“I created a lifestyle where I don’t have to work to death to have enough money to both live like I’m not in debt — and to pay off debt,” he says.
“I could have stopped learning to live on a budget and just worked 50 to 60 hours a week. But now I get to work a normal work week and have time to see parents, spend time with friends.”
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
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1 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 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% 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 Month/Day/Year, 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 08/21/18. 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 ourstudent 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.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, 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.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
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.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|