Every now and then there is a special occasion in life, worth celebrating. The day your student loans are paid in full for your master’s degree, is one of those occasions.
Meet Jennifer. She completed her Masters of Public Service and Administration and is now a lobbyist for Texas Strategy Group.
Jennifer recently paid off her graduate school loans in full, six years, and three months early.
Here’s How Jennifer Paid Her Grad School Loans Off Early
This is quite impressive, especially considering that according to CNBC, everyday 3,000 borrowers go into default on their federal student loans.
Jennifer had a different plan: borrow as little as possible, and repay what you owe as fast as possible.
To minimize how much she borrowed for her masters, she used savings and brought in an income as a student.
While many students don’t think twice about working their way through school, during her second semester she started working part-time, 20 hours a week, and then she worked full-time hours during her summer from two part-time jobs.
Working as a graduate assistant, helped pay for nine hours of tuition, and her hourly wage went to pay her remaining classes and living expenses. This greatly reduced the amount of debt she initially had to take on, however, once she graduated, like millions of others paying off student loans, she felt frustrated with her debt.
With student loan debt, there is no tangible asset.
“You have a piece of paper…the money flies out of your bank account and goes nowhere,” she said.
It’s of course frustrating paying rent, but with rent, even though you aren’t building equity, you have a roof over your head. Or if you have a car payment, you have at least the car.
Jennifer’s biggest reason to pay off student debt soon: interest.
She found the interest rate of almost 7%, that is unfortunately very common with federal loans, to be high and unreasonable. The idea that you can save thousands of dollars by paying off student debt fast made financial sense, and was a guaranteed return.
She decided to start paying double her payment monthly, but found the website for Navient, previously Sallie Mae, as confusing as possible. The first time she paid extra it just credited her for the next month’s payment,
“There is no selection to raise your payments, I looked a million times, you can’t increase it on the website. The only way to raise your reoccurring payment is to write them,” she said.
Every pay raise went to paying off debt and she eventually was paying almost four times her original payment each month, “I just didn’t want to have debt. I don’t operate like that. You don’t spend money you don’t have- that is not the way I was raised,” said Jennifer.
Her advice to anyone thinking about going back to school is to do your homework and figure out if a master’s degree is necessary for the field you’re in or not. If you find it necessary to advance in your field, then look for employers who will pay for it, and don’t forget that when you go back to school you’ll still have to pay for rent, food, gas, those expenses don’t just go away.
With her big push to get out of debt, she feels like she did not miss out on anything, while in school working part-time and after, when she went without things like cable, or satellite radio.
Her student debt is gone and, “It feels fantastic,” she said.
Now, literally everything she was paying in my student loans is going to savings to buying a home, and she’s not changing her spending patterns at all.”
Well done. Congrats Jennifer! That’s how Jennifer paid her grad school loans off early. You can pay off your loans early too.