After graduating from college, Maggie Germano moved to Washington D.C. for an internship to start her post-grad life. At the time, she was making $10 and hour for a total of $1,200 per month.
Living in D.C. wasn’t cheap either, so 50 percent of her paycheck ($600) went to sharing a studio apartment with a friend.
Yet, when her student loans were due and she realized she owed $300 per month, Maggie understandably panicked.
“I freaked out,” she explains. “It wasn’t tenable while also eating and taking the metro to work. So I was happy to take advantage of Income-Based Repayment for two years.”
In the early days of her student loan repayment, opting for an Income-Based Repayment (IBR) plan was a lifesaver. She ended up having $0 monthly payments for two years, which helped her out when her paycheck was going to bills like rent, food, and transportation.
Wondering what your student loan payments may look like on an IBR plan? Check out our calculator below to find out.
INCOME BASED REPAYMENT (IBR) CALCULATOR
Moving on up
Eventually, Maggie got a salaried job after her internship. At that point, she opted out of her IBR plan and started paying the full $300 per month toward her student loans.
However, since she hadn’t made student loan payments for two years, she still had her full $25,000 balance to pay back.
But with her higher salary, Maggie became motivated to pay off her student loans after realizing her money was not fully hers.
“I realized that I was paying interest to a company that didn’t have my best interest in mind,” she says. “I wanted my money to be my own and not something I was giving away every month for 10 years.”
Ultimately, Maggie says, “I wanted to have control over where my money was going and use it for my real goals.”
Overhauling her student loan payments
Going from $0 to $300 student loan payments certainly helped her make progress on her debt. But Maggie knew she had to do more.
So she started by paying more than just the minimum on her student loan payments.
“I did this by cutting costs like going out for happy hour, eating out for lunch, etc.,” Maggie explains. “I made paying off my debt a top priority.”
Maggie admits she turned into somewhat of a recluse, opting for staying in rather than going out in order to pay off debt. Additionally, she took the extra income from her new job to overhaul her student loan payments.
“I think the most important approach was avoiding income creep,” she says. “Income creep is real. And by making sure that I didn’t spend every extra cent I earned, I was able to pay down my debt and also build an emergency savings account.”
On top of her income increasing, she was able to lower her rent when her boyfriend moved in and split the rent.
But instead of spending the extra disposable income she now had, she was committed to putting it towards her student loan payments.
These moves essentially helped Maggie expedite her repayment. But there were still some struggles along the way.
How to stay on budget (without feeling isolated)
Maggie admits that cutting back on social activities in a place like D.C. was tough. Not only that but living there on the cheap is like an art.
“I had to really stick to a budget!” describes Maggie. “D.C. is an expensive city and people love to go to happy hour and brunch.”
“Basically, in order to be social, it is believed that you have to spend a lot of money,” she says.
Although the isolation affected Maggie emotionally, it encouraged her to do things differently. She found a way to do frugal activities with friends in order to socialize.
“I’ve figured out how to have fun with friends without spending a lot of money, which was a foreign concept before,” says Maggie.
Though there was tough times and sacrifice, Maggie was able to remain consistent with her student loan payments. She didn’t let income creep take over and she limited her expenses.
And thanks to her hard work and consistency, she was able to pay off her $25,000 student loan balance in just under four years.
Helping others get out of debt
Maggie now enjoys a life without debt and enthusiastically takes ownership of her money. She’s now able to travel and save at the same time.
“I feel like my money is truly mine now,” she says.
After becoming debt-free, Maggie was able to launch her business and help others with money. Maggie now works as a Certified Financial Education Instructor and financial coach for women.
What’s more, her journey towards debt freedom has now come full circle. She’s working to help others on their own journey out of debt.
One of best tips she has to offer for student loan borrowers looking to follow in her footsteps includes continuing to pay something if you can, even when times are hard.
Also, if you’re thinking of going back to school, she suggests only borrowing what you actually need. In the end, you’ll be paying all that money back anyways. So less is more.
For Maggie, paying off her student loans helped her get one step closer towards her vision of helping others. Imagine, what would living debt-free do for your life?
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.99% – 5.64%1||Undergrad & Graduate|
|1.89% – 5.90%2||Undergrad & Graduate|
|2.25% – 6.09%3||Undergrad & Graduate|
|1.89% – 6.77%4||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|1.99% – 5.41%5||Undergrad & Graduate|
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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 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% 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 July 31, 2020, 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 7/31/2020. 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 protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 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
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. 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. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of September 9, 2020. Information and rates are subject to change without notice.
3 Important Disclosures for SoFi.
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. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of September 10, 2020.
5 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. 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 0.16% effective August 10, 2020.