Here’s a story from SLH reader Dr. Blake Hillstead. Blake graduated from dental school with a tremendous amount of debt, which he recently finished paying off. Take it away, Blake!
Well, I finally did it. I paid off my $380,000 student debt load just 21 months after graduating.
A recently graduated orthodontist, I finished school in August 2013. I worked throughout undergraduate and dental school, and even moonlighted during my residency. Paying off my student loan debt this fast wasn’t easy, but it was definitely worth it. Here’s how I did it.
How I got into so much student loan debt
As you can imagine, becoming an orthodontist is expensive. My journey included taking out a ton of student loans.
So, how bad was it? Well, for a few years, I couldn’t bear to even sign in to look at my student loan balances. While my Stafford loans at 6.8% APR didn’t seem so bad, I also started to build a massive loan at the Grad PLUS level of 7.9%.
I tried to make interest payments whenever we could save up some extra money—just a few thousand here and there to minimize the compounding nature of interest. But when I graduated, I was shocked to see that my loans had reached a staggering figure of $380,000. The weighted average interest rate on my loans was 7.1%.
I felt overloaded and stressed by having to now repay this debt and interest, and at the same time, trying to support a family and raise young children.
Creating my payoff plan
My wife and I had many conversations about how we would pay off our student loans. We discussed whether we should pay them down aggressively or opt for the slow and steady approach so that we could immediately upgrade our lifestyle and spending habits.
We decided that we’d save a lot of money and stress if we could just pay my student loans off quickly, even if it meant making some short-term lifestyle sacrifices.
For starters, I realized that the annual interest alone would cost me about $26,000! With this in mind, my first goal became clear: refinance my student loans to save money on interest.
I used a few different options to accomplish this—
- Graduate loan refinancing program. I refinanced $55,000 in loans down from 6.8% interest rate. This was a 7-year term with a variable interest rate tied to the LIBOR. While I thought that choosing a variable rate loan might be risky, I figured the economy was still going to be slow for awhile, so I took the risk.
- I took out a home equity line on our house. This was a little gutsy—and in retrospect probably a little too aggressive. But I was able to completely get rid of my 7.9% APR loans and change them to a 3.75% fixed rate! The fixed rate was nice here since it balanced out some of the risk of my student loan portfolio.
- I refinanced through a private student loan lender. Through one of Student Loan Hero’s refinancing partners, I refinanced the remainder of my loans. This reduced my interest rates from 6.8% to 2.74% variable.
With these three refinancing options, I was able to reduce the annual interest paid by about 70%. Now my hard-earned money would go even farther as more of it started getting applied to the principal than to the interest.
Paying off my loans—as fast as possible
After refinancing my student loans, the second part of my strategy kicked in—work as hard as possible and earn as much as I could to pay off my student loans.
I not only bought a private orthodontic practice but also continued to work as an associate at other orthodontic offices to supplement my income. I worked long hours and Saturdays, and for six months, I even worked at a job where my shifts were 11 hours long with no scheduled lunch breaks!
To have more money to pay off student loans, I kept my expenses down as much as possible. Some of the best advice my brother and a close friend gave me when I graduated residency was not to make ANY big purchases in the first year after I graduated. Given that my income was about to increase dramatically compared to my student days, I knew this was going to be a challenge.
My brother told me not to buy a bigger house or a new car. Instead, he advised me to save money, pay off loans, and not get in over my head with other big expenses.
With this advice in mind, we moved out of the “starter home” we had purchased a few years ago and found tenants to move in. We decided to rent a smaller house that was comfortable yet inexpensive when we relocated after I graduated.
To keep other expenses down, we kept our old cars, didn’t do anything extravagant, and paid off a good little chunk of our student loans. It was a sacrifice.
In addition, I kept on reading and thinking about how to pay off my debt. Student Loan Hero’s blog posts helped me strategize and stay focused. It was a great resource for me and got me on track to pay off my loans and save TONS in interest.
In addition, reading student loan payoff success stories on the Student Loan Hero blog helped me stay motivated along the way, too.
As I started paying down my loans, it was like a snowball gaining size and momentum—once I got a taste of that feeling of satisfaction, it got easier and easier to commit more money to getting them paid off.
My final student loan payments
All the struggle and effort paid off. Pretty soon I had cut my loans down substantially! When I had only $150,000 left in student loans, I felt the burden had lifted. My loans were now much more manageable than the massive $380,000 balance I started out with. I kept at it, knowing that the end was within reach.
In May I celebrated my 31st birthday, and I had saved up quite a bit of money. For a birthday present to myself, I sent a check in the amount of roughly $120,000 to my last student loan servicer. I just received the letter saying my check had cleared. Now I can proudly say I am free from my student loans!
Lessons learned – how you can pay off your loans too
We traveled a hard and disciplined road to get where we are now—in a tremendously powerful financial situation.
I would recommend that student loan borrowers try their best to pay their student loans down early. It reduced the stress in my life and has made me feel so much better about my professional career decisions. It’s also opened the door for me to start saving now for my children’s college educations, our retirement, and other financial goals.
No matter what amount of debt you have (or what your income is), I believe the principles for paying off student loans remain the same:
- Figure out how to pay off student loans as efficiently as possible. In my case, refinancing my loans helped me save a ton of money, which I could then put toward loan principal instead.
- Work REALLY hard. Earn as much as possible and pay it toward your student loans. Although I worked incredibly hard, I knew I only had to do it for a short time until my student loans were paid off. In my opinion, making sacrifices early in your career to pay off student loans is a smart decision.
My education has been the best investment of my life. And after my choice of career, my next best decision was to pay off my loans fast and free up the rest of my life from having to worry about payments every month!
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