How to Wrangle in Your Student Loan Payments Like Maggie Germano

student loan payments

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

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Your monthly payment on IBR would be , a difference of from what you are currently paying. If your income increases over time, your payments may increase. Assuming annual income growth of 3.5%, your final monthly payment would be . After making payments for — years, you will have paid a total of and would receive in forgiveness, compared to your current plan where you will pay over the next — years.

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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?

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