On March 10, 2010, I went to the academic hooding ceremony recognizing the completion of my MBA at the University of Denver.
Getting an MBA from a private university is an expensive undertaking. When I started working on my degree, the estimated cost of attendance for the entire program was $91,994. Tuition alone was $67,000.
Even so, a little over two years after graduation – 736 days to be exact – I made my final student loan payment. Here’s how I made it happen and how you can follow in my footsteps to pay off your student loans in just a few years.
Get started on the right footing
I come from a very academically focused family. I always knew I wanted to follow in my grandfather’s footsteps and get an MBA at an early age. My grandpa managed to graduate from Georgia Tech with an undergraduate degree at 19 and got his MBA a few years later, so I had some tough shoes to fill.
I completed my undergraduate program at the University of Colorado debt-free thanks to a full scholarship from the Boy Scouts. I then went on to began my career in banking a couple of months later.
Like many millennials looking to save money after graduation, I moved back in with my parents and started saving thousands of dollars each month. After all, my only expenses at that point were my car, a new grown-up wardrobe, and nights out on the town with friends.
It didn’t take long to realize that I was not in the right job for me, so left the company after about six months to work on something new. At that point, I had saved the majority of my salary for half a year, which left me with the biggest bank balance of my life.
Working during school
When I left the bank, I started looking for finance jobs in different industries. I also decided it was time to start working on that MBA.
I studied hard and rocked the GMAT, gathered my transcripts, and started applying for MBA programs at the same time I was applying for jobs. I also worked as a restaurant waiter for a few months to keep the cash coming in while looking for something new.
I decided at that point that I was going to work full-time while getting my MBA full-time. Crazy? Maybe. Hard work ahead? Definitely.
Shortly after getting accepting to my top choice MBA program, I got a call back from a big telecommunications company I had applied to. A week later, I had a job offer as a financial analyst.
I made it very clear during my interview that I was going to get the MBA, and wanted to work out a way to get the MBA full-time while working full-time. There were no surprises when I showed up on day one with an MBA start date just six months away.
I worked out a deal with my boss that I would get all of my work done – putting in time from home on evenings and weekends if necessary – and in exchange could leave early when needed for my evening class schedule.
When I started working on my MBA that September, it hit me how hard this was really going to be. However, I knew I could do it if I put my mind to it. I started the journey ahead and made my first MBA tuition payment from a combination of student loans, savings, and income from the day job.
Making student loan payments during school
I received a combination of subsidized and unsubsidized Stafford loans to help pay for my MBA program, which added up to about $40,000 in total. The subsidized loans didn’t accrue any interest while I was still in school, but the unsubsidized portion started accruing interest right away. I did not want to see those balances grow while I was still in school.
I moved into off-campus housing a month before school started, but knew I had a huge expense in my near future. I found a place with a roommate for $400 per month and kept myself on a strict budget while in school, using an expense tracker to keep me focused.
I started making student loan payments the month my first loan was issued. Even though no payments were due for over a year and a half, I started making payments around $250 per month to chip away at the loan balances during school.
Laser focus on debt repayment
When I graduated with my MBA, I had a big number in front of me and my subsidy period was ending for the subsidized portion of my loans. With a 6.8% fixed interest rate, I wanted to get my loans paid off as quickly as I could to save thousands of dollars in interest.
I stayed in an inexpensive apartment, with rent just under $700 per month, and held other expenses as low as I could. I increased my payments as well. Rather than making the minimum payment each month, I paid it each payday for double the minimum payment each month.
In addition, every time I had a cash windfall, such as a tax refund or bonus at work, I put 100 percent of that into my loans. In my case, that led to an extra $5,000-$10,000 per year.
With a payoff strategy like that, I was destined to be debt-free in under five years. But that wasn’t good enough for me. Did I mention I hate paying interest?
While keeping my budget low, I watched my checking account balance slowly climb each month. After putting away a modest emergency fund, I started putting everything left over each month into the student loans as an extra payment. Even after rent, utilities, car expenses, and bar tabs, I had at least a few hundred dollars left over each month, which all went into the loans.
The final payoff
Two years later, I found my balance was sitting around $3,700. If I dipped a little bit into my emergency fund (maybe not the best idea in hindsight) and put all of my next paycheck to my loans, I could pay it all off on my next payday.
So I did.
There is one big downside to this story: if my pay day had been a week earlier, I could have called this article, “How I Paid Off My Student Loans in Less Than Two Years.” However, two years and six days is what it took.
Wherever you are on your student loan journey, do not look at this as something “I can’t do.” Yes, I do have a couple of fancy finance degrees, but there is no reason you can’t do the same thing I did.
Work on growing your income, managing your budget, and putting every cent into extra student loans payments that you can. If you do, you may just find yourself looking at a balance that you can pay off on your next pay day.
Every dollar counts and paying off your loans all starts with the next dollar. Don’t believe me? Enter your information into this student loan payoff calculator to see how soon you can be debt-free.
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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.
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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.
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|2.57% – 8.17%6||Undergrad & Graduate||Visit Citizens|