Have you ever told yourself a little lie so many times that you started to believe it was true? Suddenly you’re justifying behaviors like smoking or eating 10 cookies in one sitting. You can’t exercise because you’re “too busy.” You convince yourself you’ll be better “tomorrow.” And the cycle continues.
Seemingly innocent fibs like these can do some serious damage. But it’s not just these lies that can affect your success, health, and relationships. There are also lies you tell yourself that keep you shackled in debt.
Here are 5 lies that keep you from paying off student loans. Any of them sound familiar?
1. “Student Loans Are ‘Good’ Debt”
One of the most pervasive lies around is that there’s “good” debt and “bad” debt. Are student loans better than credit card debt? Sure. But is it good debt? Well, now that’s an oxymoron.
You’re borrowing money now and paying it back later with interest on top. In my opinion, there’s nothing good about debt. It’s another financial obligation is holding you back from your goals.
Yet this lie is told again and again. Borrowers become complacent about their debt repayment because it’s the “good” kind of debt.
In order to overcome this lie, realize that debt is debt. While all debt is not created equal, none of it is good and you should work hard to pay it off as soon as possible.
2. “I Can’t Afford to Save Money”
Have you ever found yourself having to choose between covering an emergency expense or making your student loan payment? Does a paycheck-to-paycheck lifestyle make it nearly impossible to stay on top of your student debt?
Not having an emergency savings fund set aside makes it tough to get out of debt. When an unexpected bill pops up or you have to make a big-ticket purchase, you’ll probably have to forego a student loan payment or even resort to credit cards to afford it. The belief that you can’t afford to save money can lead to financial insecurity and even more debt.
If you think you can’t afford to save, you never will. Saving money is a habit that needs to be fostered. I’ve been pretty broke in my life and I’ve made it a habit to save something from every paycheck, even if it’s only $10.
If saving money has been a struggle, start by putting away one percent of your salary. As your income permits, start increasing that number. Having a cushion of funds will help you be financially secure and allow you to focus on paying off student loans.
3. “Making the Minimum Payment Is Enough”
I have a confession to make: for the longest time, I believed this lie. I thought making minimum payments was just fine and dandy. I was making on-time payments on my Standard Repayment Plan. I patted myself on the back.
In reality, I could have put about double the minimum payment towards my debt each month. Minimum payments are just that — the bare minimum you have to pay to avoid default. But by making the minimum payment only, you extend the length of time it will take to pay off your loans and significantly increase total interest paid.
Check your income and expenses to find out how much money you can afford to put toward student loan payments each month. Even an extra $50 per month can help expedite your repayment. Find out how an extra payment can expedite your debt repayment progress.
Remember, you’re battling interest — in order to overcome those extra fees, you need to pay more than the minimum to get ahead.
4. “Someone Will Bail Me Out”
Some people are counting on someone to bail them out of their student loan debt. They are waiting for student loan reform, a rich partner, or even a hefty inheritance from Mom and Dad.
Believing that someone will bail you out of student loan debt is like waiting for Prince Charming; it’s probably not going to happen. The worst thing you can do is stop paying your student loans in the hopes you find help down the road.
Acknowledging your debt is the first step towards taking action. Even though it would be nice to have someone else wave a magic wand and make your debt disappear, think about how much sweeter life will be once you pay it off yourself. It will be a huge accomplishment!
5. “I Need to Make Six Figures Before I Can Pay This Off”
With such a large amount of money looming, it can feel like you have to be rich to pay off that debt. Sure, it would help to make six figures a year, but it is possible to pay off student loans on a lower income.
I continued to pay off debt even when I was making between $20,000 and $30,000 a few years ago. I’m not alone either. Personal finance blogger Zina Kumok paid off her student loans on an income of $30,000 a year.
Paying off debt on a low income isn’t easy, but it is possible. It requires sacrifice and creativity — and quite frankly, many people think you have to be rich to pay off debt because they’re not willing to put in the work. Paying off debt is work, but working hard now means financial freedom later.
I’ve found that paying off student loans is just as much about shifting your mindset as it is about making financial changes. We all tell ourselves little lies that sabotage our goals. In a way, it’s normal. If you recognize any on the list, don’t worry, you’re not alone.
Once you recognize the lies you’ve told yourself for years, you can take action and make small changes to pay off your debt once and for all.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
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 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
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|