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.
Incredible relief was replaced, almost instantly, by the fear that Navient was somehow going to mess it up.
That’s how Martha Menard felt when making the last payment on her $40,000 student loan debt. Martha didn’t sense the closure of her debt because she couldn’t trust her servicer to manage it.
“I loathed Navient, and my experience with the customer service representatives I spoke with was incredibly frustrating,” she says. “I checked the site every few days to make sure my balance was still zero.”
A Ph.D.-sized debt
Although it would remain zero, Martha started becoming skeptical of loan servicers not long after earning her Ph.D. from the University of Virginia.
After lowering her debt to $36,000 via the federal government’s income-sensitive repayment plan, Martha elected to defer her loans in 2002. The pause allowed her to deal with a divorce and decreasing income. But when her deferment ended and the interest capitalized, her debt surpassed $40,000.
She consolidated the loans with Sallie Mae to the tune of an 8.75% fixed interest rate. But by the time her consolidated loan ended up in the hands of Navient, obstacles started appearing in her path.
“I had sent Navient an extra check one month with a note on the check itself that it was to be applied to the loan principal,” Martha remembers. “When I went online to verify, I saw that they had taken out interest first, then applied the now smaller balance against the principal.”
To combat Navient’s practice, Martha started to make additional principal payments on the same day her bank’s automatic payments were put toward interest. This was how she learned that correctly applied loan payments can save you interest.
The side hustle solution
As Martha grew wiser about personal finance, like the difference between good debt and bad debt, she started putting all of her discretionary income toward her loan payments. Going way beyond the minimum payment started to loosen Navient’s stranglehold on her finances.
Martha knew she had Navient in her sights when she scored a high-paying contract job with the now-defunct Samueli Institute in Alexandria, Virginia. She worked as a faculty member helping hospitals figure out ways to improve care for patients living with chronic pain.
It was the kind of gig that could only land in the lap of someone with her specialized degree; she wrote her dissertation on the effectiveness of therapeutic massages after surgery.
The work netted her nearly $19,000 she could put toward her remaining debt.
For nine months before her final loan payment, she sent Navient about $1,500 more than her minimum $500 payment.
“All thanks to my high-paying consulting gig,” she says.
Martha’s final student loan payment
On Oct. 5, 2015, Martha paid Navient one last time, to the sum of $1,457.70. Given her distrust of the servicer, she logged back into her account twice a week until her payment arrived. She also received a letter in the mail stating that the loan had, in fact, been completely repaid.
“After a year, I recycled that,” Martha says. “If I [were] going to keep anything, I would have kept that letter — I did feel a sense of accomplishment at paying that off.”
It might have taken a full 365 days to appreciate being debt free, but Martha calls it “exhilarating” to have removed an “evil” servicer from her life. She celebrated with a dinner out alongside her husband.
“I guess I should have celebrated more,” she says, laughing. “I more often find myself telling people about mistakes I made. But maybe I should tell them about the last payment, too.”
Your last student loan payment
About 40 percent of America’s $1.45 trillion student loan debt was used to pay for graduate and professional degrees. Martha doesn’t regret going to graduate school. In her case, it got her the temporary job that helped her pay off her loans.
But Martha’s advice for you is to consider whether your degree — whatever it is — is worth the debt it will force you to accumulate.
More likely, you’ve already earned your degree. In that case, Martha says to do everything in your power to pay as little student loan interest as possible.
“If you’re a year or two away from having it paid off, consider whether you’re willing to earn more or save more to get the student loan paid off as soon as you can,” she says. “It’s a great feeling to be out from under that burden of debt, and then you’ll have more money to do other things.”
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.
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 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
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
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|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.80% – 6.22%2||Undergrad & Graduate||Visit Laurel Road|
|2.51% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.57% – 8.17%6||Undergrad & Graduate||Visit Citizens|