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.
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|2.90% - 7.34%||Undergrad & Graduate||Visit Citizens|