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Imagine paying off your student loans in two years — and then deciding to take on yet more debt. When assistant professor and HR consultant Matthew Burr realized his choice in a master’s program prevented him from growing beyond his specialty in human resources, that’s just what he did — after paying off $74,000 in his first round of student loans.
The thought of investing more money into education after finally paying off a mountain of student loan debt may seem overwhelming. But Burr realized what he wanted and went for it, with strong results. Here’s how he managed to do it, and what his experience can teach you about managing your own student loan debt.
How to pay off $74,000 in student loans in two years
Living on less than $1,000 per month to pay off student loans
Taking on more student loan debt
Paying off new student loan debt
What you can learn from Burr’s success
Some other options for managing your student loan debt
When Burr graduated with his bachelor’s and master’s degrees, he was left with $74,000 in student loan debt. Once he calculated the interest he was paying on his student loans each month, he decided to act fast.
As Burr tells it, he was a few months into his repayment when he started tracking the interest and discovered that it was increasing by $100 every week — and that was all the motivation he needed to start paying off his debt, fast.
Just as Burr did, you too can calculate the interest on your own student loans to see how much interest you’re paying every month, and how much of your payment is actually going toward the balance of your loan. Go to Student Loan Hero’s interest repayment calculator here.
Burr aimed to pay all his student loans off in two years, so he created a budget that had him living off of less than $1,000 per month.
Living in Northern Michigan and being able to find reasonable rent certainly helped, but so did a decision to use only basic cable, to not buy a new car when his current car was paid off and to avoid credit card debt. He then used a signing bonus at his first job and all of his tax refunds to make lump-sum payments on his debt.
Burr was paying anywhere from $2,500 to $4,000 per month on his loans — all because he decided a speedy payoff was more important to him than fulfilling any instant gratification that spending his hard-earned money would bring.
And it worked. In fact, it worked so well that he decided to write a book about paying off his debt. Burr attributes his success in paying off his $74,000 student loan debt in two years to sacrifice, dedication and goal setting.
So why would someone who already paid off a significant amount of debt go back into it? In Burr’s case, he’d always wanted an MBA, and realized the work he most enjoyed involved finance and operations.
He wasn’t afraid to wade back into debt, as he already knew this was something he could manage. Thus, he pursued his MBA dream, going into $117,000 in debt for the new degree.
And so far, he has yet again been successful in paying his student loan debt off. As of April 2020, Burr has not only paid off a significant chunk of the MBA he completed in 2017, but he has in fact taken on even more debt for another degree — a master’s of jurisprudence in labor and employment law.
“Thus far, I have paid off roughly $102,000 in student loan debt in 26 months and owe roughly $15,000” on the MBA, Burr said.
His third master’s degree is in progress, due to be completed in May 2021. At time of writing, Burr stated he currently has around $31,000 in debt.
“My goal is to have all debt cleaned up by mid-2021, and owe $0 on student loans forever,” he said.
He noted that he’s using the same methods he did the first time to manage his debt this time: living well below his means, avoiding other debt and paying for everything in cash when possible, keeping the student loan interest accruals as close to zero as possible and paying the higher-interest loans first (he has three loans in total). While concentrating on the higher interest debt first, Burr is using the avalanche method of debt payoff. This differs from the snowball method, which would have him focusing on paying off the smaller loan balance first.
The principles Burr has lived by can provide lessons for all of us when it comes to paying off student loan debt:
- Understand how much you’re really paying in interest.
- Create a budget.
- Learn to sacrifice and live off of very little.
- Avoid other forms of debt, such as credit card debt.
- Consider whether you want to focus on the higher-interest payments first (avalanche method) or pay off the smaller loans and move on to the higher ones as you do (snowball method).
Seeing how much interest you can save if you get rid of those student loans fast can be a real motivator. You can check out our prepayment calculator to get a better idea of how getting rid of your student loans fast might impact your overall payments.
Burr’s experience represents one person’s strategy for paying off student loans quickly. Here are some other options you can consider as well.
- Refinancing: Refinancing often works best with private student loans, but it’s also possible to refinance federal student You’ll have to refinance with a private lender, so you’ll give up the benefits that automatically come with having federal loans, such as income-driven repayment and loan forgiveness programs. Consider all factors carefully before you take this step. If you do decide refinancing is right for you, explore your options with these student loan refinancing lenders. You can also check out Student Loan Hero’s refinancing and refinancing vs. consolidation calculators to further explore these options.
- Student loan forgiveness and income-driven repayment programs: Depending on the field in which you work, particularly if you are in public service or education, you may be able to get some or all of your debt forgiven. You can also look into income-driven repayment programs, which can lower your payments to as little as 10% of your discretionary income.
- Deferment or forbearance: In times of financial hardship, you may be able to temporarily stop making student loan payments by taking advantage of deferment or forbearance
Check out our deferment, income-based repayment and public service loan forgiveness calculators to further explore your options. Here, as well, is a guide specifically to repaying student loans for your MBA.
Shannon Insler contributed to this report
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
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|2.25% – 6.09%3||Undergrad & Graduate|
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|1.97% – 8.54%5||Undergrad & Graduate|
|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.
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.
4 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 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% 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 October 26, 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 10/26/2020. 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.
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 11/13/2020 student loan refinancing rates range from 1.97% to 8.54% Variable APR with AutoPay and 2.95% to 8.77% Fixed APR with AutoPay.