13 Proven Strategies for Paying Down Student Debt in a High-Cost City

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“There isn’t enough money to pay bills, save, pay off debt, and have fun.”

That’s what Candice Marie, founder of money blog Young Yet Wise, said about the challenges of making ends meet in an expensive city (in her case, the Boston area).

If you, like Marie, are living and working in a city with a high cost of living while trying to get out of debt, her statement is practically the song of your people.

13 ways you can pay off student loan debt in a high-cost city

Finding ways to pay off student loan debt can be tricky when you’re barely keeping up with the high prices of the city where you live.

“There’s only so much you can cut from your budget each month,” Marie said. And when living expenses are high, you’ll reach that hard basement limit on your budget pretty quickly.

But many people who live in a high-cost city manage to pay extra on their debt on top of covering steep expenses. We talked to seven real people doing exactly that and found out how they’re knocking out their student loans. Here are their best tips.

1. Pay high-interest debt first

By paying extra on your debt, you can get ahead of interest charges and save money.

“Pay off high-interest-rate loans first,” said health and fitness writer Karen Morse, and you’ll save the most.

Morse moved to expensive Palo Alto, California, after earning her master’s degree in public health.

“You probably have multiple loans coming out of college or graduate school that are taken out each semester,” Morse pointed out. “If you have a little extra cash to spare each month, consider paying more on that loan (apply it to the principal amount).”

2. Take advantage of income-driven repayment

If your student loan balance or expenses are high compared to your income, standard student loan payments can stretch your budget too thin. That was the case for Samantha Mallon, a mechanical engineer who lives in a high-cost suburb of Denver.

“Living in an area that is a much higher cost than what I was used to growing up has really affected me,” Mallon said. “For my federal loans, I had to switch them into the repayment plan based off my salary.”

Getting on an income-driven repayment plan lowered Mallon’s monthly payments and kept them affordable.

3. Round up student loan payments

“I was always taught by my father, a financial advisor, to round up my required monthly payments to contribute more toward principal,” said Allyson Pereira, an attorney living in a suburb of Providence, Rhode Island.

For example, if you have monthly student loan payments of $360, pay $400 instead. It might not seem like much, but it adds up. You can use our student loan prepayment calculator to estimate your savings.

Pereira sometimes would go the extra mile too.

“If possible, I would add another $100 or so to chip away at the principal even further,” Pereira added.

4. Pay off debt in chunks

Paying extra on student debt each month is a smart strategy. But taking big chunks out of a balance (sometimes called “debt-chunking”) can be even more satisfying.

“Look at the payoff amount of each loan,” Morse said. “If you have a loan that can be paid off in a lump sum, consider doing that when your yearly bonus check arrives instead of splurging on a vacation or luxury item. You will thank yourself in a few years!”

5. Maintain an emergency fund

“Having a large savings is more important than chipping away at debt,” said Rich Fetterly, a lab tech who’s worked to repay $20,000 of his $80,000 student debt.

Building up an emergency fund is a must-do if you live in an expensive city. “Not having a savings leaves you very vulnerable in emergency situations, such as medical accidents or loss of employment,” Fetterly explained.

To make sure he always had a savings safety net, Fetterly used the debt-chunking method.

“[I] saved up in the bank until I reached an amount that could pay off my smallest loan,” Fetterly said, while maintaining a comfortable emergency fund.

6. Create a social debt challenge

As she worked toward paying off debt, Marie found her motivation lagging.

“After a while, paying off debt alone was boring,” Marie said. “So I created a debt challenge and got other people involved.”

Marie enlisted 10 friends and set up a “debt competition to see who could pay off the most debt in 11 weeks.” Together, they paid off $39,500 over the course of the challenge.

“Creating my debt challenge really helped me stay motivated and focused,” Marie added. “I would see other people putting lots of money toward their debt, and so that would motivate me to put more money toward mine.”

7. Set (and follow) a budget

Ryan Alfson, who lives in Denver, is a CPA and co-founder of personal finance blog Just Another Dollar. While living there, Alfson and his girlfriend have paid off $27,000 of their combined $100,000 in debt.

They started with the basics. “First, we established a good written budget,” Alfson said. “In a high-cost city like Denver, there’s infinite ways to spend money if you don’t have a plan.” Simply setting and following a budget helped the couple cut food costs from $1,200 a month to just $650.

8. Cut back on nonessentials (within reason)

Setting up a budget can help you become more intentional about spending.

“It’s very easy to get caught up in the hustle and bustle of NYC and spend an incredible amount of money on brunch, dinner, and drinks,” said Kerrie Barry, an attorney who lives in New York City. She tries to avoid that mindset and instead cooks at home and plans fun “nights in.”

Mallon made a similar point. “Cutting back on the nonessential things in my life has really helped me to pay extra on my debts,” she said.

However, Alfson pointed out that it’s important to add some fun into your spending plan as well. “Our budget still allows us to go out to eat one night per week,” he said.

Alfson and his girlfriend also take advantage of the perks of city living. “There’s always plenty of free events going on around a big city, so take advantage of those instead of spending your money,” he added.

9. Increase your income

“Another way we take advantage of living in a big city is providing services that are in demand,” Alfson said. “Find a side hustle you love and use the earnings to pay down your debt.”

Alfson earns a few hundred dollars each month by pet sitting through Rover — and it’s fun. “The dog time alone is worth it!” he said.

“There are many ways to make extra money in your downtime,” Alfson added.

For instance, Fetterly said he often works overtime, which gives his budget a boost. Pereira has searched through her (and her mom’s) belongings to find treasures worth selling on eBay for extra cash.

10. Rent only what you can afford

“In order to live in Philadelphia, I first had to figure out if the job I was taking could support my living expenses and debt,” Fetterly said.

He knew he’d have to contend with higher costs — on top of $1,000 a month in debt payments. So he started with his projected take-home pay, carefully crunched the numbers, and identified his rent budget: $900 or less. And he stuck to it.

“If you have student loan debt, don’t buy or rent a house [or apartment] you can’t afford,” Morse advised. “Live within your means.”

11. Get a roommate

There are definitely trade-offs to having roommates. But the payoffs can be huge too.

Barry said living with two roommates is a huge part of her strategy to repay her $250,000 student debt (so far she’s knocked out $15,000).

“I pay about $1,150 in rent, and that is with two roommates,” Barry said. “If I lived alone, I would pay close to $1,800 per month.” That means she saves $650 or more a month by living in a shared space. It also cuts back on utility costs, Barry added.

12. Move backward

If it’s an option for you, consider “moving backward” like Marie.

“I moved back home to help me save money and put more toward my debt,” Marie explained. “I still pay rent but not as much as I would if I were on my own.”

It can feel like a setback, Marie acknowledged. “After graduating, it can be tempting to want to live above your means, get your own place, buy new furniture because, hey, you deserve it,” Marie said.

However, according to Marie, if “you have a chance to go back home, you’ll end up moving forward faster,” as you’ll free up more money to pay off debt.

13. Compare buying vs. renting

Depending on the housing market where you live, buying could be cheaper than renting.

“When a couple of friends of mine bought a house and I heard what they were paying for their mortgage, I was shocked,” said Pereira. It was significantly less than her monthly rent of $1,380 for a one-bedroom apartment.

So Pereira decided to save for 14 months, got a down payment together, and bought a home. She now pays a $854 mortgage — saving her $526 a month compared to renting.

Not everyone will save with this strategy, but you could. Of course, it depends on the housing market in your city, so do your research and carefully compare renting versus buying before you decide.

Lastly, although it might not be possible or right for everyone, you might want to consider whether living in an expensive city is worth the cost. Do some cost comparisons and find out if moving to a cheaper city could help you pay off debt more quickly.

Interested in refinancing student loans?

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1 Important Disclosures for Earnest.

Earnest Disclosures

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 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% 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 Month/Day/Year, 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 08/21/18. 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 hello@earnest.com, or call 888-601-2801 for more information on ourstudent 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 Laurel Road.

Laurel Road Disclosures

Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.

Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.

Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.

Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.

3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance:Fixed rates from 3.899% APR to 7.804% APR (with AutoPay). Variable rates from 2.470% APR to 6.990% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.470% APR assumes the current index rate derived from the 1-month LIBOR of 2.08% plus 0.64% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score.
  2. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

4 Important Disclosures for LendKey.

LendKey Disclosures

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.

CommonBond Disclosures

  1. Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018.

6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate DisclosureVariable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of October 1, 2018, the one-month LIBOR rate is 2.22%. Variable interest rates range from 2.72%-8.32% (2.72%-8.32% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.75%-8.69% (3.75%-8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled. Applicants with an Associate’s degree or with no degree must have made at least 12 qualifying payments after leaving school. Qualifying payments are the most recent on time and consecutive payments of principal and interest on the loans being refinanced. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a cosigner who is a U.S. citizen or permanent resident. The cosigner (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a cosigner will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
  7. Estimated average savings amount is based on 14,659 Education Refinance Loan customers who saved on loans between August 1, 2017 and July 31, 2018. The calculation is derived by averaging monthly savings across Education Refinance Loan customers whose payment amounts decreased after refinancing, calculated by taking the monthly payment prior to refinancing minus the monthly payment after refinancing. We excluded monthly savings from customers that exceeded $4,375 and were lower than $20 to minimize risk of data error skewing the savings amounts. Savings will vary based on interest rates, balances and remaining repayment term of loans to be refinanced. Borrower’s overall repayment amount may be higher than the loans they are refinancing even if monthly payments are lower.

2.47% – 6.99%3Undergrad
& Graduate
Visit SoFi
2.47% – 5.87%1Undergrad
& Graduate
Visit Earnest
2.47% – 8.03%4Undergrad
& Graduate
Visit Lendkey
2.95% – 6.37%2Undergrad
& Graduate
Visit Laurel Road
2.48% – 6.25%5Undergrad
& Graduate
Visit CommonBond
2.72% – 8.32%6Undergrad
& Graduate
Visit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.