Starting your own business can be a daunting endeavor with no guarantee of success. But University of Denver graduate Matt Holmes knew he wanted to be an entrepreneur, and he wasn’t going to let this uncertainty — or his student debt load of $100,000 — hold him back.
After graduating, Holmes took the road less traveled to manage his loans, see the world and start a business. Here’s how he made it all work and ultimately got his big risk to pay off.
Leaving school $100k in debt
After earning his bachelor’s degree in psychology at the University of Denver, Holmes went straight into an MBA program. Even with a grant and help from family, Holmes had to borrow a large amount in loans to pay for all this education.
“The bill ticked over $100,000 at its peak, despite graduating a little early,” said Holmes. This amount was spread out over eight different loans, which had interest rates as high as 7.8%.
While the loan payments were heavy, Holmes knew he needed to free up monthly cash flow if he was going to start a business. To do this, he put his federal loans on income-driven repayment.
“I was on [an] income-based repayment plan right out of school because I was launching my first real estate company and had no extra income,” he said. “That meant I showed no income on my tax return, which allowed my student loan payment to be $0 [per] month.”
Thanks to income-based repayment, Holmes was able to keep his loans current and not go into default. But his debt kept accumulating interest — more than $7,000 per year — so he got to work increasing his income.
Launching his online businesses
Holmes’s first entrepreneurial endeavor out of graduate school was an online enterprise called Holmes Real Estate Company, which connected out-of-state investors with properties in Denver.
After learning the ropes with his first company, Holmes pivoted into public speaking and consulting. He founded Handshakin.com, a company that helps other entrepreneurs build their personal brand and grow their businesses.
Today, Holmes works full-time on his business and has been able to use the online income he generates to pay down his massive student loan balance.
“I owe around $30,000 of student loans, and that’s less than half of what I started with,” said Holmes.
He also took on credit card debt when starting his businesses and made it a priority to pay it off first, since it had such high interest rates.
Living (and hiring) abroad to lower expenses
As an entrepreneur, Holmes is used to looking for unconventional solutions to problems. So when it came to managing his personal finances, he took a less-common approach: leaving the country.
Holmes has lived in the Philippines, Malaysia, Thailand and other places that helped him lower expenses due to their relatively low cost of living. This experience has also allowed him to hire people from around the world to draw on global talent and keep costs down.
“[I] have been learning about different cultures, traveling around the world, and minimizing payroll expense when starting,” Holmes said.
Because his business is online, Holmes is able to work from anywhere, hire globally and pay off debt faster as a result.
Paying off his student loans ahead of schedule
Having seen his unconventional choices pay off, Holmes encourages other borrowers to leave no stone unturned in their quest to become debt-free.
He advises others to think outside the box, whether that means launching an online business or moving to Southeast Asia to lower living expenses as he did.
“Until someone is debt-free, I believe that any endeavor should be used to help decrease loans,” said Holmes, in describing how he chose to meld his entrepreneurial and travel dreams with his need to pay back student debt.
Starting a business when you have student loans
If you too have a combination of student loan obligations and a dream of being your own boss, know that it can be done. Here are a few tips to get you started:
- Consider income-driven repayment for your student loans. Income-driven plans adjust your monthly bills, so you can — hopefully — have more capital to put toward your new business. But remember that the less you pay toward your loans each month, the more interest that will accrue, so make sure to review the downsides of income-driven plans before going this route. And if you have private student loans that aren’t eligible, look into refinancing that debt instead.
- Apply for grants for new business owners. Once you have a clear idea of your business, search around for grants that could help with start-up costs. You might also look into start-up accelerators that offer funding and mentorship, or launch a Kickstarter campaign to ask for support from your community.
- Determine your risk tolerance. Launching a business can be risky, especially if you owe a lot in student loans or credit card debt. Think about how much financial risk you’re willing to take on, and try to come up with a back-up plan for paying off your debt, just in case. That way, you’ll cover your financial bases while still pursuing your goal of entrepreneurship.
If you owe a lot in student loans, choosing the uncertain path of the entrepreneur may or may not be the right move. Carefully consider your goals so you can make the best choices not just for your loans, but also for your life.
Interested in refinancing student loans?Here are the top 7 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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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 3.45% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 2.05% APR (with Auto Pay) to 6.49% 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 11, 2019, 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 10/11/2019. 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 our student 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 SoFi.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
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. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
Fixed rate options consist of a range from 3.75% per year to 5.80% per year for a 5-year term, 4.25% per year to 6.25% per year for a 7-year term, 4.55% per year to 6.65% per year for a 10-year term, 4.85% per year to 7.05% per year for a 15-year term, or 5.30% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan). The monthly payment for a sample $10,000 loan at a range of 3.75% per year to 5.80% per year for a 5-year term would be from $183.04 to $192.40. The monthly payment for a sample $10,000 loan at a range of 4.25% per year to 6.25% per year for a 7-year term would be from $137.84 to $147.29. The monthly payment for a sample $10,000 loan at a range of 4.55% per year to 6.65% per year for a 10-year term would be from $103.88 to $114.31. The monthly payment for a sample $10,000 loan at a range of 4.85% per year to 7.05% per year for a 15-year term would be from $78.30 to $90.16. The monthly payment for a sample $10,000 loan at a range of 5.30% per year to 7.27% per year for a 20-year term would be from $67.66 to $79.16.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed 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.
Variable rate options consist of a range from 2.50% per year to 6.30% per year for a 5-year term, 4.00% per year to 6.35% per year for a 7-year term, 4.25% per year to 6.40% per year for a 10-year term, 4.50% per year to 6.65% per year for a 15-year term, or 4.75% per year to 6.90% 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 0.45% to 4.25% for the 5-year term loan, 1.95% to 4.30% for the 7-year term loan, 2.20% to 4.35% for the 10-year term loan, 2.45% to 4.60% for the 15-year term loan, and 2.70% to 4.85% 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 2.50% per year to 6.30% per year for a 5-year term would be from $177.47 to $194.73. The monthly payment for a sample $10,000 loan at a range of 4.00% per year to 6.35% per year for a 7-year term would be from $136.69 to $147.77. The monthly payment for a sample $10,000 loan at a range of 4.25% per year to 6.40% per year for a 10-year term would be from $102.44 to $113.04. The monthly payment for a sample $10,000 loan at a range of 4.50% per year to 6.65% per year for a 15-year term would be from $76.50 to $87.94. The monthly payment for a sample $10,000 loan at a range of 4.75% per year to 6.90% per year for a 20-year term would be from $64.62 to $76.93.
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.
Borrowers who take out a variable loan with a term of 5, 7, or 10 years will have a maximum interest rate of 9%. Borrowers who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of October 1, 2019 and is subject to change.
4 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.
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 2.05% effective September 10, 2019.
6 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.
7 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 09/23/2019. Variable interest rates may increase after consummation.
|2.05% – 6.49%1||Undergrad & Graduate|
|2.05% – 5.98%2||Undergrad & Graduate|
|2.25% – 6.65%3||Undergrad & Graduate|
|2.43% – 7.60%4||Undergrad & Graduate|
|2.14% – 7.21%5||Undergrad & Graduate|
|2.01% – 8.88%6||Undergrad & Graduate|
|2.74% – 6.24%7||Undergrad & Graduate|