When Erica Doré graduated from college, she found herself with over $80,000 in student loans. Thanks to high interest rates, her balance had ballooned over time, and the total came as a surprise.
With a huge monthly bill, Erica couldn’t afford her loans.
“It was awful,” says Erica. “My loan balance was over $80,000. I really didn’t see or fully understand the numbers until after I graduated. I didn’t really understand what I was getting into.”
Although she had always dreamed of becoming an interior designer, the salary was not enough to cover her expenses and her student loans payments. She had to make the difficult decision to change her career to make more money.
But, she happened to come across Student Loan Hero while she was researching her loans. She learned about new strategies that would help her take charge of her loans and, now, she’s back on track and on her way to paying them off.
Getting into debt
Originally from Seattle, Erica dreamed of becoming an interior designer. “It’s what I always wanted to do since I was a child,” she says.
She started school at the Seattle Art Institute to follow her dream. However, the Art Institute is notoriously expensive; a bachelor’s degree in interior design costs over $89,000, not including the cost of room and board.
“It was not cheap,” says Erica. “After three years there, I switched to Central Washington University, which was a little cheaper.”
Because she switched schools, she needed to spend two more years to get her degree. The high cost of her first school plus the additional years of tuition added up. She had a mix of both federal and private student loans to pay the bill. Her private loans had an interest rate of 9%, which caused them to rack up $20,000 in interest by the time she graduated.
Rethinking her career
After graduation, Erica started working. But with student loan payments totaling over $1,000 a month, she couldn’t keep up with the bills.
“I just couldn’t afford it on my starting salary,” she says. “I went to college and wanted to make my life better, but instead my student loans were a real burden.”
Struggling to make ends meet, Erica was forced to give her finances a hard look. She had already cut her budget to the bone but still couldn’t afford her payments. Running out of options, she made the difficult decision to give up her dream of becoming an interior designer.
“I had to give up what I wanted to do,” she says. “It wasn’t going to be enough to pay off my student loans.”
Instead, she made a drastic change. To help get her career off the ground, she put her student loans into forbearance and started working for an office furniture company. “I started [my job] at $11.50 an hour and worked my way up to a $60,000 salary,” she says.
Conquering her loans
As her pay improved, Erica started looking for ways to better manage her debt.
“I don’t like having these loans,” she says. “My motivation is to pay them off as soon as possible so I can do what I love.”
She started researching student loans and repayment options online before stumbling on Student Loan Hero in her Facebook feed.
“I checked out the website, and it seemed like there were real people with real student loans behind it,” she says. She signed up for the newsletter and started receiving tips about making more money and paying off loans faster. One of the suggestions that grabbed her attention was student loan refinancing.
When you refinance your student loans, you take out a new loan with a private lender for the amount of your original debt. The new loan has completely different terms than the old one, including a new interest rate, repayment term, and monthly payment. In Erica’s case, she refinanced to make her payments more affordable and to reduce the interest fees.
“[Student Loan Hero] helped me figure out my options and which company would be willing to work with me,” Erica says.
With her increased income, Erica applied for refinancing with CommonBond. The interest rate on her private loans dropped from 9% to 6.2%. She also decided to extend her repayment term to give her budget more breathing room.
“I still planned to throw more money at them,” she says. “But I wanted the flexibility, so I extended them to 15 to 20 years. It cut down my payments by nearly half.”
Now, her payment is just $650 a month rather than $1,000, freeing up money to use for her other goals.
Erica was also inspired to start her own side hustles to make more money. She took on dog-sitting, a part-time job at TJ Maxx, and freelance interior decorating to make extra money. Launching her side gigs helped her make additional loan payments.
Now, Erica no longer feels overwhelmed by her debt and she’s more in control of her finances. She understands the importance of financial literacy and continues to learn more through personal finance courses.
Taking charge of your debt
If you’re facing a large student loan balance like Erica, she advises you to do some homework.
“I would say do a lot of research,” she says, “Honestly, the first thing I did was Google ‘student loans,’ and I learned a lot about interest rates, like the difference between fixed and variable rates.”
If you’re overwhelmed with your debt and don’t know where to start, sign up for Student Loan Hero’s newsletter to get weekly tips for paying off your debt faster.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
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 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% 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 email@example.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
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
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.
3 Important Disclosures for SoFi.
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 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.57% – 6.97%1||Undergrad & Graduate|
|2.47% – 6.99%3||Undergrad & Graduate|
|2.68% – 8.77%4||Undergrad & Graduate|
|3.24% – 6.66%2||Undergrad & Graduate|
|2.61% – 7.35%5||Undergrad & Graduate|
|3.01% – 9.75%6||Undergrad & Graduate|