I Paid Off My Grad-School Student Loans Six Months After Graduation: My Top 7 Tips To Help You Do The Same
I am a huge article reader. Everything from Forbes, to Yahoo!, to Chicago Tribune, to Newsweek. I love reading others' opinions and insights. One re-occurring theme in all of these publications is student loans. I have read countless articles how "Bob," "Sam" and "Jane" have all paid off their student loans. Yes, this is a huge feat, and yes, it deserves praise. However, as I go to send a comment-congratulations(!), I notice that the countless comments on how:
1. Most of the college expenses were taken care of by scholarships and/or grants
2. The person lived with parents or in-laws, thus having no housing costs
3. The person graduated to start a six-figure income career
Yes, these things may be true for the featured person of the article, but does it make the feat of paying down debt any less worth of a high-five? As an online community, shouldn't we be supportive and congratulate each other, no matter how small the feat?
Ok, ok, I will take a step off my soap box.
I started to think about my own college experience. I graduated my undergraduate program with no loans. However, I went on to earn three Masters degrees-all of which I financed through working multiple jobs and Federal Aid (aka student loans).
I started the first Masters program first off the undergrad graduation stage. I was twenty-two and very naive. I took out loans for the entire degree, and then some. I wanted to keep up with the lifestyle that my parent's recently decided to stop financing. (So, yes, I also was a spoiled brat and financially stupid). I was taking classes and teaching mandated financial classes through a non-profit. I was giving advice that I had no grounds to give, yet some where along the lines the idea of compound interest began to scare me. I picked up a part-time job and swore that I would have the student loan paid off six months after graduation.
And I did. The entire loan. Student loan free. What a relief.
Yet, a few months later I decided to go back to school to get a MBA. I wanted to get the program completed fast. I didn't have the money to pay for the entire program upfront, so I took out more loans. However, this time, I took out the minimum and paid for the rest as I signed up for the courses. During this time, I was either in class, writing papers, or working. I picked up another part-time job to help finance the education (thus having 1 full time and 2 part ). The lack of sleep must have made me a sucker, because I was talked in to taking "just a few more courses" to get a MS-Accounting. At the time it sounded like a good idea, but let's face it, probably not the best decision I've made.
Again, I vowed to have these two degrees paid for six months after graduation.
From January 2012 to April 2013, I took out $16,890 in student loans, all of which I paid back by July 7, 2014--six months after my December 2013 graduation. I paid $786.76 in total interest on the loans. If I I would waited until the six month grace period had expired to start paying, and then only have paid the minimum $194 monthly, it would have taken ten years to pay off. I saved myself over six grand on interest.
No, I did not receive any scholarship or grant. No, I did not live with my parents during this time. I owned a house with my finance (who was laid off part of the time). No, I did not make a lot of money. I worked for a non-profit full time, another non-profit part time, and was a waitress/bartender on the weekends. Yes, my social life suffered. But yes, I paid off the loans before the grace period kicked in.
Here are some tips/advice that I learned, regarding student loans:
1. Seriously, ONLY TAKE OUT WHAT YOU NEED (tuition, books, room and board)! Why pay interest on lifestyle choices?
2. Look for scholarships and grants. I have read that there are a lot of scholarships that no one applies for, just because it takes a little bit of writing work in the application. Take the time and buck up and just do it! It could pay off!
3. Make sure the program you choose, is A. has career potential and B. something you will enjoy doing long-term.
4. Pay on those student loans while you are going to school! This helps pay down the principal. Until the grace period expires, the interest does not compound. Paying down that principal while you are in school can really help you out.
5. To help with student loans that would go towards books, try various websites that lets you rent the assigned text book at a fraction of the university's bookstore cost. I liked Chegg, but I was known to shop around to look for the best deal.
6. If you can avoid using loans to pay for room and board, DO IT! This tip goes back to my undergrad days, but you can find a house/apartment a lot cheaper than what it costs to live in a dorm. Again, shop around.
7. That extracurricular tennis (quidditch, chess, art etc) class may sound cool in the course description, but DO YOU NEED IT TO GRADUATE? If not, how much is it going to cost? Look at clubs and intramural activities for fun alternatives, especially on a large campus. These options are limitless.