When you graduate from college, there’s a good chance your student loan debt outpaces your starting salary. That can make it difficult to get ahead — but it’s not impossible.
Find out how one woman went to extreme lengths to get rid of her student loans years ahead of schedule.
Starting out with student loan debt
Becky Freeman graduated in 2014 with a degree in biology. Along with her diploma, she left school with about $29,000 in student loans.
Becky’s starting salary as a research assistant for a biotech company was enough for her to live on. But because of the high cost of living in Providence, R.I., she couldn’t afford to move out.
“I really wanted to be an independent adult as soon as possible,” says Becky. “But … a $350 a month loan payment prevented me from being able to rent in my area.”
She lived at home with her family, which she admits was a huge help — both for her finances and her quality of living as she struggled with her debt.
“Living at home helped me save money on rent, but it also allowed me to be more aggressive with my debt repayment strategy,” says Becky.
Tackling student loans
Becky was laser-focused on her goal of becoming debt free. To accelerate her repayments she took on two part-time jobs on top of her full-time employment.
“I worked my 9-to-5, then taught a chemistry lab after work two nights a week,” says Becky. “On weekends, I worked part-time as a sales assistant at Michael Kors.”
Working three jobs to pay off loans isn’t for the faint of heart. Becky is the first to say that keeping up her demanding schedule required extensive support.
“I’m not going to lie, I felt sleep-deprived often,” she says. “But living at home helped. I didn’t have to worry about grocery shopping or cooking for myself. My family support system was essential to pulling it off.”
At first, Becky focused on maintaining her minimum loan payments and saved her extra income. When she reached a certain threshold, she would take some of the savings she had stashed away and would pay off a chunk of her loans.
“Soon I was paying an extra $1,000 a month towards my loans on top of my regular payments,” says Becky. Within two years, her hard work paid off. She paid her loans off in full, a staggering eight years ahead of schedule.
“It felt so good to pay them off,” says Becky. “All of the hard work made a difference, and seeing the results was amazing.”
Now that she doesn’t have to worry about her student loan payments, Becky’s crazy schedule has calmed down a little. The money that she used to dedicate to debt repayment now goes to her savings. She dreams of becoming a landlord and is planning on buying a rental property.
While Becky’s approach to debt repayment was aggressive, she says that anyone can take charge of their loans. “My advice would be to take one step at a time,” she says. “Think about what you can reduce each month and think about what skills you have that can make money. There are tons of side hustles you can start to bring in extra income.”
Considering your living situation
Nationwide, the average rental payment is $1,250, according to ApartmentList.com. For recent graduates with student loans, that’s a huge expense that can make managing your bills difficult.
If you’re able and have willing family members, moving in with your relatives can be an excellent strategy to save money and accelerate debt repayment. Although this isn’t an option for everyone, it’s become increasingly common. About 30 percent of millennials live at home with their parents.
Finding a side hustle
When it comes to debt repayment and maximizing your budget, you can only reduce your expenses so much. If you have a small salary, there’s not often enough left over to pay down your debt, let alone to make extra payments towards your loans.
If you want to accelerate your repayment, but have a limited income, finding a side gig can be a great way to pay down your debt. You can find jobs like Becky had, working part-time after work or on weekends.
Another option is to take on flexible side hustles, like driving for Lyft, delivering packages for Amazon, or shopping for groceries with Shipt. These “gig economy” jobs are available when you have time and are available to work, so you can set your own schedule.
Working a side hustle can help you earn money on your down time, which you can then dedicate towards your student loans. Using that money for debt repayment can pay off in the long run.
Putting your weekly earnings towards your loan balance can cut off years from your repayment term. Not to mention it will save you hundreds or even thousands of dollars over the length of your student loans.
For more information about increasing your income, check out these 5 simple side hustles you can start tomorrow.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for SoFi.
2 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 2.50% APR (with Auto Pay) to 7.27% 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 April 17, 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 04/17/2019. 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.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
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.
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.
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.
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 2.49% effective March 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.50% – 7.27%1||Undergrad & Graduate|
|2.50% – 7.12%3||Undergrad & Graduate|
|2.53% – 8.79%4||Undergrad & Graduate|
|2.50% – 6.65%2||Undergrad & Graduate|
|2.55% – 7.12%5||Undergrad & Graduate|
|3.00% – 9.74%6||Undergrad & Graduate|