Yes that title was clickbait… kind of. This is a story about how I paid back and continue to pay back my student loans. I have found a lot of benefits from reading about how other people are paying their student loans so I thought it would be fun to add to the growing list of stories.
In the beginning
When my wife and I got out of collage in 2016 and we both had a healthy mix of federal and private student loans.
Federal — One consolidated lone totaling $35,881.48
Private — Who knows how many totaling $90,000.00
Total — $125,881.48
Monthly Payments — ~1,800/month
Federal — One consolidated lone totaling $16,061.22
Private — 3 loans totaling $22,092.00
Total — $38,153.22
Monthly Payments — ~760/month
The main reason my wife’s student loans are so much larger than mine are because she attended a private university for one year which cost roughly $40,0000 a semester. She only ended up staying there for 1 year as the cost of the schooling was too stressful. We were both lucky enough to find jobs right out of collage. My wife was a Labor and Delivery nurse and I worked as a software engineer at a small consulting firm.
After a year and half
For the first year or so we were only making minimum monthly payments on all of our student loans. We both had recieved some decent pay bumps but were not putting the extra money toward anything but savings.
We were, however, pretty annoyed with most of my wife’s pay checks going to student loans payments and I was feeling like my own loan payments were getting in the way of building our savings or finding a better apartment.
TBH I don’t enjoy dealing with finances but I was feeling compelled to do something about the situation. I didn’t do a whole lot of reading about how to tackle large loan payments but I know myself well enough to know that if I didn’t see progress relatively quickly after making higher payments I would probably get discouraged.
We decided to make an extra $500+/month payment to one of our lowest student loans which was one of my private loans that was sitting at about $4,500. We thought it would be wise to continue building our savings and making 401K contributions while we make these extra payments so this is how we landed on $500/month. It felt like a goal that was achievable every month without feeling like too much of a burden. The extra payments just meant we couldn’t go out to eat as much or order food too often but we still had a little bit left over to go out or order food sometimes.
We also decided to consolidate and refinance my wife’s $90,000 private loans. This way we could get a lower minimum monthly payment since her current interest rate was about 11–15% on each loan. ☠️ We ended up refinancing with commonbond for 15 years at 5.8%. Althings considered this felt like a pretty decent rate. This brought the monthly payments down to about $712/month.
A few things to look out for when refinancing
I want to quickly share a few things I learned when researching how to refinance my wife’s student loans. Some of these are really stupid mistakes on my part so brace yourself. 😆
1. If your wife has bad credit and you have good credit you can help by becoming a cosigner
This is the part where you can laugh at me but I didn’t know what a co-signer was or how it worked. Or maybe I did but just didn’t think about it enough. Either way my first plan went like this, I have good credit she has bad credit so I should just apply for a loan in my name and pay off her loans with the money I received. This way her bad credit wouldn’t effect the rate we received. This was a really stupid plan. This is what a co-signer is for. I needed to request the refinancing in her name, since it was her student loans, and be a co-signer that way my good credit would help her out. Luckily, I made this mistake and then immediately figured out the whole co-signer thing and applied for another refi loan before it made any impact to my credit that would effect our rate. 😅
2. Don’t bother refinancing federal loans
Federal loans are generally already set at a good rate. Not to mention they have a lot more resources for paying back loans if you fall on hard times that the refi companies will have. I am sure there is a situation where it might make sense but generally you should avoid this. If someone is trying to tell you to refinance your federal loans you should be very suspicious.
2 years after this plan was put into action
After about 2 years of making at least $500/month toward my private loans we had them all paid off! 🤯 We did the snowball technique once we paid one loan off so that we had more than $500/month to throw at the next loan and any extra money we received also went toward the extra payments. By extra money I mean things like side hustle money and bonuses.
Also I had gotten quite a few pay raises from switching jobs and moving up to some new positions so I was able to put a lot more toward my loans any given month.
Now at this point we were feeling pretty good about our progress with our student loans but TBH I was afraid of what would happen when we took our obvious next step. Both of our federal student loans had lower interest rates than our refinanced $90K loan so now was the time to start attacking the big loan.
Tackling such a big loan I was afraid that we would loose motivation since we wouldn’t really feel any difference until the loan was paid off. I was afraid we would stop making extra payments and just revet back to the minimum payments.
3 years later. Did we keep up extra payments?
After 3 years I am happy to report we are still making extra payments! 🎸 We obviously haven’t paid off the $90K we had originally refinanced but we are down to $39K.
Over these three years I was lucky enough to find another side hustle with some people I had met working in consulting that helped me boost my minimum extra monthly payments from $500/month to $1000/month with the maximum reaching as much as $3400/month. This side gig was a no walk in the park and TBH not sure it was worth the effort but I am happy with the financial boost we got.
Also during these three years the pandemic and the federal student loan pause happened. As I mentioned at the beginning of the article I don’t enjoy looking at finances so made another mistake during the pause. I didn’t realize that any payments you made during the student loan pause would be applied to the principal of your loan. 🤦♂ Had I realized this I would have continued making my usual monthly payments.
If I can rant for a second about the federal loan pause. This was a forced pause with no way to reenable auto pay. I would have preferred it be opt in instead of it being turned on automatically but 🤷♂️
- Avoid student loans if you can. They suck. Fuck student loans.
- If you want to get out from under your student loans just make whatever extra monthly payments you can but don’t forget your 401K or rainy day fund.
- If your loan terms suck and you need lower monthly payments maybe find a co-signer if your credit is not great and refinance that shit.
- Don’t refinance federal loans.
- Don’t go to a private college. It is never worth it unless it is paid for without loans.
- If you are offered or find a side hustle take it but be prepared for it to hurt ☠️
Hopefully this is helpful to someone out there. I am not a finance guru and I don’t care to be one so I hope this perspective is interesting to someone.
How is your student loan repayment going? Have you found any tricks that have helped you mentally prepare to paying back loans?