Too often, loan repayment success stories are shrugged off. Even when we can appreciate how someone paid off thousands in debt, we might forget to ask: What was it like when you made that last payment?
Welcome to The Moment: A recurring series that aims to rehash memories from ex-borrowers for the benefit of current borrowers. Our hope is that hearing these tales just might push you closer to your final payment, too.
In April 2015, after years of challenges and mishaps, Tina Lensing sent off her final payment on her student loan and car loan debt totaling $38,000. Although Tina was able to pay off the last $28,000 of her debt in 10 months, she lacked a repayment strategy for the first six years.
“It felt like freedom,” Tina remembers. “Like I was on top of a mountain, breathing fresh air.”
And then the feeling was gone. Still fearing debt, Tina was immediately preoccupied with repaying her boyfriend’s student loans, too.
Find out how Tina conquered her aversion to debt and kicked her repayment strategy into overdrive.
Setting up a 10-month repayment strategy to pay off $28K
Tina recalls the panic she felt when the six-month grace period on her student debt ended. “I remember a brief conversation with my parents … where I was like, ‘Oh man, now it’s a reality, now I have to actually pay this back,’” she says.
Tina earned her undergraduate degree in social work in 2008 before returning for a master’s degree in 2011. With a $15-per-hour job out of college, Tina moved her federal Direct Loans to an income-driven repayment plan. She made minimum automatic payments without giving much thought to her debt.
Later, when her salary crept up into the $50,000-plus range, her minimum payments increased from $200 to $300. It wasn’t until 2014 when she got serious about zeroing her balance.
“I had felt trapped [because] I wanted to start my own business,” says Tina, a social worker-turned-business and life coach. “I felt like I couldn’t have that [opportunity] when I had student loans.”
Tina dipped into her savings and started her 10-month payoff journey in June 2014 with a payment of $5,400 to her servicers. Check out the roadmap she made herself below.
Making the last student loan and car loan payment
By April 15, 2015, Tina realized she was $1,000 short of reaching her goal. In order to get to the finish line, she made small sacrifices every day, including:
- Taking road trips instead of vacations
- Making and bringing lunch to work instead of buying it
- Learning how to politely say no to friends to avoid overspending on nights out
All of Tina’s sacrifices paid off when she got her final student loan payment notice from Great Lakes.
Soon after submitting her final loan payment, Tina and her boyfriend, Justin, splurged by going out for dinner.
“And then immediately, I was like, ‘Now I need to pay off all [your] student loans,’” Tina recalls. She says she had gotten into the mentality that she and her boyfriend wouldn’t have true freedom until their debt was repaid.
Additionally, Tina explains, “I was in this really frugal mindset where I wasn’t letting myself have any luxury or joy in my life.”
Even though Tina was making good money, she says she was, “Pouring it all into student loans. It didn’t feel joyful because of my obsessive mentality.”
Overcoming a fear of debt
That’s when Tina’s relationship with money began affecting her relationship at home.
Justin was less afraid of his student loan debt than Tina. He was aware of it, but he wasn’t ready to make the kind of sacrifices Tina had made to clear her balance.
Nevertheless, Tina kept her momentum going and put about $10,000 toward her boyfriend’s loans. This isn’t that uncommon; about 55% of borrowers say their significant other helped them make payments, according to our survey on couples and student loans.
“I would get judgemental when he would want to eat out during the week,” Tina recalls. “I was almost a little controlling, like, ‘I’m contributing money to you now, so you have to abide by my rules.’ It was silly.”
Tina says she would also feel guilty for wanting to use her income to start her coaching business. Her mindset about debt made her want to prioritize paying off Justin’s loans first.
A revelation made Tina reverse course. She saw her struggle as a teaching point for her future coaching clients.
“It was the perfect segway for me to begin to ‘walk my talk’ … rather than be judgemental or be harsh or not be collaborative,” Tina says. “I started learning about my connection to money and debt.”
Justin, who’s still in repayment, also learned from their struggles as a couple.
“He became more independent and accountable,” Tina says. “And I became less fearful of debt. We were able to really learn from one another and [found] a happy medium.
Ultimately, Tina says, “We could still enjoy some luxuries, vacations, and time together while still being responsible with money.”
Work toward your last payment — with the right mindset
Tina went from passively making minimum loan payments to attacking her debt with all her might. Although she’s happy with the results, she learned not to let a fear of debt take over her life.
If you’re whittling down your student loan debt, Tina recommends organizing your payoff strategy and figuring out how much you can put toward student loan payments ASAP.
But she also says to make some space for a healthy life balance. If going on a vacation or spending more time with friends lengthens your debt payoff plan by a couple of months, you might decide that’s worth it.
Your relationship with money is perhaps even more important if you have a personal relationship to maintain too. Tina’s advice for you includes:
- Team up on your debt and find common ground, such as a long-term financial goal.
- Keep the process fun and light to avoid money-related fights.
- Set time for open dialogue where you plan but also celebrate milestones.
Keep these tips in mind as you work toward your last student loan payment. By going about repayment in the right way, hopefully, your moment will bring nothing but relief.
If you’re nearing or recently made your last student loan payment, we want to hear about it. Your story might inspire someone to follow in your footsteps. Write to email@example.com.
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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 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% 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 firstname.lastname@example.org, 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
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. 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. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
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.
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 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.57% – 6.97%1||Undergrad & Graduate|
|2.47% – 6.99%3||Undergrad & Graduate|
|2.68% – 8.77%4||Undergrad & Graduate|
|3.24% – 6.66%2||Undergrad & Graduate|
|2.61% – 7.35%5||Undergrad & Graduate|
|3.01% – 9.75%6||Undergrad & Graduate|