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$144,205 Paid Off in 4 Years on a Teacher’s Salary

$144,205 Paid Off in 4 Years on a Teacher's Salary

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Wow. I can’t believe it has been 4 years on this journey and I really can’t believe I have paid off so much debt. When I graduated from grad school in August 2015, I was drowning in $201k in student loan debt. And I went to school to become a teacher.

To this day, I regret taking on so much debt to become a teacher. The truth is, I didn’t know any better and this was what I was told to do. I was completely naive to what student loans were and what I was signing every semester.

The good news was that I had my realization when I had just started grad school and was able to make some serious changes and put a plan in place prior to even graduating. You can check out my financial breaking point story here, if you’re curious about the time I got a bill for $1,400 while making $1,100 every month. A reality check for sure!

But, back to the point of this post, celebrating my 4 year anniversary of being on this journey to pay off my student loans. This year has been a wild ride to say the least. It certainly didn’t go as planned and I’m honestly shocked by where I’m currently at while typing this post.

A year ago, I was living at my parent’s house, working as many side jobs as I possible could, and teaching in a school that gave me major anxiety, all to get these student loans paid off. I was in my fourth year teaching and completely lost as to what to do. It was my tenure year and I couldn’t imagine myself staying there any longer, like even one more day.

The reality was that I had to finish the year because of a grant I received in undergrad and grad school. If I left midyear, I would add $27k to my total student loan debt that needed to be paid off and that just wasn’t an option.

Finishing this last school year made me truly understand why I wanted to pay off my debt. I never want to force myself to stay in a horrible situation, just because of money.

At that point, I had paid off enough of my student loans that my minimums were about $1,100. Still incredibly high, but nothing compared to when I started. I immediately started applying to jobs in December, with the idea that I’d have a job for June, or the next school year.

The year felt like it dragged on, having to go to a place that gives you physical symptoms from anxiety, is brutal. It got to the point where my doctor put me on medication and wrote me out of work, as needed, to manage my symptoms.

Luckily, in March, I interviewed at a school that I truly felt was different and that I belonged there. It was for a reading specialist position and the culture of the school seemed to be completely opposite of where I currently was teaching. I was offered the job, accepted it in April, and took a pay cut for it.

To this day, I still struggle with if it was the right move to take the pay cut because it is drastically slowing down my debt pay off. But, the reality is, I am working somewhere that respects and supports me as a person and as a professional. That’s not something I was getting at my previous employer.

My mental health is in a far better place than it was 5 months ago. My days are longer, my commute is longer, but I still come home with so much more energy than I ever did before. Which speaks for itself.

My debt pay off may extend, but I just keep reminding myself that I’m still paying extra and I’m still in a significantly better place than I ever would have been if I never started. I never could have accepted this job, if I hadn’t paid off so much debt. I wouldn’t have been able to afford cost of living and my minimum payments.

So, even though I’m not debt free, paying off as much debt as I have has already positively changed my life and opened up more opportunities for me. Let’s get into the details of the last year.

Major Life Changes Happened This Year

I moved back home with my parents after I graduated from grad school. They lived in a high cost of living area, which allowed me to have a higher salary than most teachers (I started at $56k with a master’s degree and 3 teaching certifications). This allowed me to actually afford my minimum payments of $2,000/month. I lived there for the majority of the last 4 years in order to pay off as much debt as possible.

This past June, I moved out of my parent’s house and into a house with my boyfriend about an hour away. This increased my living expenses in the last couple of months. It also meant that all of my babysitting and tutoring clients I had, are gone, which was another hit to my income.

I started my new job on July 1st teaching summer school to a few of my students that I would have in the fall. It was an awesome way to slowly get used to the new school and my new coworkers. Other than summer school, I only worked VIPKID this past summer and took 10 days off completely to go on vacation to my boyfriend’s parent’s house. It was the perfect way to recharge for my new job.

Also, my boyfriend and I got the cutest mini bernadoodle puppy named Cooper in August. He has been a huge expense, but he brings me so much joy that it is worth every dollar. We had been talking about getting a puppy for a very long time, we both had started saving for a dog, so we’d be prepared when we found the right one.

$38,800 Paid Off This Year

It has been challenging for me to see my debt pay off slow down so significantly. I’m trying my hardest to shift my mindset and realize that I have been on this journey for 4 long years. I have made a significant dent in my debt and I have sacrificed a lot to get here.

It’s okay to slow down now. It’s okay to spend money on the things I value most. I have been sacrificing for so long that it feels weird to be spending money now and to have so much less left over at the end of the month.

This is a number I am so proud of because this is with a significantly lower income and significantly higher expenses the last few months. It’s a number I reached while only paying minimum payments all summer.

I know my debt pay off will be less in year 5 and I’m slowly accepting that it’s okay. My minimum payments have dropped to $541, which is SO much more manageable than they were. I know I will still pay off my debt early, it just might not be by my 30th birthday.

I also refinanced my private loans again with Earnest. I’m not sure I can say enough good things about this company and I truly mean that. They dropped my minimum payment without telling me because I had paid off so much. Then, started making additional principal only payments for me. Of course, I called to confirm this was correct.

You will never guess what their answer was, “Of course it’s correct, it’s to pay off the loan faster!” I still can’t believe it honestly. I highly recommend them because they truly do want you to get out of debt, which is clear based on what they did when I had paid off a significant amount of my loan. We can both get $200 when you refinance your student loans with my link. If you’re not sure if refinancing is for you, check out my post that walks you through the questions you should ask yourself before refinancing.

Current Debt Totals to Be Paid Off

I still have my federal and private student loans. I have always used the debt avalanche to target my specific loans. The snowball never made sense for my situation because my smallest debt was 5 figures, I had no quick wins (Don’t know what I’m talking about? Check out my post about the debt snowball vs. debt avalanche). So, I wanted to save the most money in the long run.

It has helped me significantly because now, so much more of my payment goes to the principal. Having large debt figures with high interest rates is so hard to tackle. But, once the higher rates are gone, it makes it so much faster to pay off the debt.

I just refinanced my private loans for a second time to get a slightly lower rate, but mostly to lower my payment from $865 to $239. This will allow me to put more money towards my federal loans with a higher rate, paying them off faster. And it gives me such peace of mind to have a manageable payment now, instead of $1,100.

My federal loans currently total $44k and my private loans are just under $12k. I’m currently focusing on my smaller loans within my federal loans that have higher interest rates. Once I am done tackling the higher rates, I’ll pay off my private loans and then finish off the last of my federal loans.

My Plan for Year 5

Year 5 is going to be interesting. My debt pay off will definitely be less. I can realistically put $1,500 to my debt every month. Anything over that is awesome, but not very likely. This is significantly less than I have been paying in the past.

I also have a ton of expenses next year I need to cash flow. Next year I have 4 weddings and one of them I am a bridesmaid in. I’m so excited to watch some of my best friends get married and I want to think nothing about money when I’m celebrating them. So, I’m cash flowing it slowly every month before.

Cash flowing and sinking funds are awesome for these kinds of expenses. I’m contributing to my emergency fund, car sinking fund, and wedding fund (Not for me! For my friend’s weddings!). This is a lot of cash going to these funds. I know it’s for good reason though, so I’m okay with it.

These are big expenses I know I need to make, so I might as well prepare for them. Then, I won’t be scrambling when they come up. I’ve been realizing more and more that I need to consider the unknown and be more prepared for it. I’d rather have more cash sitting in my savings account, then not have the cash when an emergency comes. That’s why I’m beefing up my emergency fund while paying off my debt.

Also, I really hope to increase my income, but it’s hard with my minimal time I have with my long commute and long day at school. But, I have found one tutoring client I see on Sundays, which has been perfect.

I’m ready to see what the next year has in store for me. I can’t wait to see where I am in one more year. Six figure debt can be seriously intimidating, but you can get out from under it, just take it one step at a time. I’d love to hear about your journey to pay off your debt in the comments below! 

Debt

How a 6 Figure Debt Free Journey Is Different

How a 6 Figure Debt Free Journey Is Different

This post may contain affiliate links. Check out my Disclosure Policy for more information.

I say it a lot, 6 figure debt is no joke. And I’m not including a mortgage when I say this. I’m talking about 6 figures of non-mortgage debt.

This would be debt like credit cards, personal loans, car loans, student loans, etc. Basically I’m referring to anything that is debt, that isn’t a mortgage.

There are a lot of people in this boat. Don’t think that you’re alone.

I was there with $201k in student loans to become a teacher, which wasn’t the brightest idea. But, after just under 4 years, I have paid off $134k. I still have more to pay off, but the ridiculous burden is much less now.

Because I have experienced 6 figure debt, I know that it is much different than other debt free journeys.

From the start, you have to accept the fact that your journey will be different than most people because a lot of people don’t have 6 figure debt.

It also is going to be very different if this is your own debt, or if it is you and your partner’s debt. That makes a huge difference. For me, it was just myself that had all this debt and it was just me to pay it all off.

This is how a 6 figure debt free journey is different than others and what to consider if you are paying off 6 figures of debt.

1. The amount of time you will be on your debt free journey.

Let’s be realistic. We all would love to pay off our debt in 12 months. But, with 6 figures of debt, especially if you’re single, is going to take a longer time to pay off.

Don’t let this get you down. Never compare your journey to someone else’s, only use it for new ideas, motivation, or suggestions.

Paying off 6 figures of debt is going to take some serious time, but don’t let that get you down. Use it to motivate yourself to get creative and find ways to shorten your journey.

When I first started, my projected journey was going to be 8 years. I’ve paid off $134k in under 4 years. You can bet that this journey will not take me 8 years anymore.

I used undebt.it to figure out and track my debt free date. This is a great way to keep your motivation up throughout your journey.

2. The amount you send to debt each month will be much higher.

When you have 6 figures of debt, your minimums are naturally going to be high. That’s just how the math works. All over the #debtfreecommunity on Instagram is people sharing their monthly debt payoff. Myself included.

When I first started my journey, my minimums were roughly $2,000 every month. If I posted my monthly payment of $2,015 it looked like I sent a ton to debt, but I wasn’t making much progress.

My shovel was so small in the beginning because my minimums were so large. I was making these massive payments, but only a very small amount was higher than my minimum.

This meant that my journey didn’t get much shorter in the beginning.

Don’t get discouraged by this part in the beginning. Have faith in the process and keep working the plan.

3. You’re going to need to find more streams of income.

When you have 6 figures of debt, you’re going to need to increase your income to see progress. You can only cut so many expenses from your budget, but your income is infinite.

That’s how I made such large progress in my debt free journey. I moved to a high cost of living area, which gave me a higher teaching salary.

This also allowed me to make a lot more in my side jobs, I have 5 consistent streams of income. You can get a copy of my multiple income stream tracker here.

And I’m not saying you’re going to need to work your life away. But, find other sources of income and put it towards your debt.

This can be as easy as negotiating a raise at your current job, or working OT, if it’s offered.

4. To see a major payoff, you’re going to need to make major changes.

Like I said in number 3, with 6 figure debt you just need to do some things differently. In order to see major payoff, you’re going to need to make some major life style changes.

I mentioned moving to a higher cost of living area to have a higher salary. You probably thought, higher cost of living means higher everything else too, right?

You’re totally right, but not when you get creative about housing.

For me, I was making $3,000 a month with a minimum payment of $2,000. I moved to the area because it guaranteed me a salary that could at least support my minimum payments.

Most parts of the US, I wouldn’t have made enough as a teacher to even cover my minimums. So, I moved to a higher cost of living area and moved back into my parent’s house.

I told them my plan and explained to them that I would be putting every single extra penny I had to my debt. They allowed me to live rent free for almost 4 years and this is by far one of the biggest ways I was able to pay down my debt quickly.

This isn’t an option for everyone, but think of ways to hack your housing costs. Find a cheaper apartment, get a roommate, or use AirBNB to rent your space.

The key is to not compare your journey to someone else’s journey.

It can be really hard not to compare your journey to another’s. But, when you have 6 figures of debt, your journey will most likely look a lot different than most.

You’re not going to be super intense for 5 years. That would be absolutely insane. Maybe you can do months like that, but it’s not realistic to do multiple years.

Keep working on your plan and your goals. You’re going to get there, it’s just going to take a bit longer. Do you have 6 figures of debt, how has your journey been different than a typical debt free journey?

Debt

Here’s Why Your Student Loans Are Getting Bigger

 

Here's Why Your Student Loans Are Getting Bigger

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Student loans are a rare kind of debt. Most people take them out because they figure they’re “good debt,” and they can get a higher income with it post grad.

This usually is true and for some careers, you absolutely need a degree. But, you should be very aware of how much debt you are taking on while in school.

Of course, this is dependent on the degree you are going after. If you’re studying to be a doctor, chances are you will have a high income post grad. If you’re like me, studying to be a teacher, chances are your income is going to be lower.

Don’t make the same mistake I did and take out $201k to become a teacher. It will be nearly impossible to survive post grad, trust me.

And you just might find yourself in a situation of having your student loans get larger post grad, even if you’re making your payments.

How do student loans increase, if I’m making my payments?

I know it sounds crazy, but it’s very true. It happens to so many people. They make their minimum payments, but they realize their total is increasing, not decreasing.

This is the sad reality of student loans. Student loans are the craziest debt, in my opinion, especially federal loans, when you don’t understand them. They can’t be wiped away with bankruptcy and they can increase, even when making minimum payments. Also, they have a ton of different options for repayment and forgiveness.

But, that’s exactly why they are a problem and why they increase. People see they have a minimum payment of $0 and think it’s awesome.

The reality is that your loans are still accruing interest every single day. Once a year the interest capitalizes and now it’s part of your principal balance. Now, that total will be accruing interest and suddenly your loan has ballooned in size.

This happens to so many people and the fact that it even is possible is so terrible, in my opinion.

How can I prevent them from getting bigger?

The very first thing you need to do is become aware of your student loans and where your payment goes every month.

If your loans are private, you’re most likely fine. Usually, private loans don’t have the crazy repayment plans and require you pay off the interest and some principal in your minimum payment each month. To be sure, check your statement and see where your payments are going.

If your loans are federal, you need to very carefully check your payments. If you are on any kind of payment plan, you need to make sure your interest is being paid off every single month. If you see that your interest isn’t being paid off each month, this is when you get your loans increasing.

I’m not saying don’t use a payment plan option on your federal loans, I’m personally on one to lower my payment while I focus on other student loans. But, I’m sure to pay off at least my interest every month no matter what.

And this is how I prevent my student loans from getting bigger.

If you have student loans and are making minimum payments, I absolutely think you should check out how your payment is being made. Make sure you’re paying off the interest every month.

If you’re not paying off the interest every month and you see that it is growing. Make a change right now. Increase your payments to at least cover the interest. Make sure this happens by putting it in your budget and treating it like the minimum payment.

You might think it doesn’t matter, but once the interest capitalizes into your principal and it’s accruing even more interest, it will matter. It will make it much more difficult to pay off in the future.

Basically, just pay your interest in full every month.

That’s how I go about my student loans. No matter what, I pay off my interest in full. And I know that these loans qualify for forgiveness in 10 years of on time payments. But, that’s a super long time to be paying a minimum payment on these things.

Personally, I would much prefer to pay them off faster and just get to do whatever I want with my hard earned money.

Also, I assume that these programs won’t last. I don’t want to count on something that may not work out for me. Plus, I took out the loans and I absolutely should have to pay them back, so that’s what I’m doing. Do you have student loans? Have they increased in size while you pay the minimums?

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Debt Free Update: $133,718 Student Loans Paid Off!

Debt Free Update_ $133,718 student loans Paid Off!This post may contain affiliate links. Check out my Disclosure Policy for more information.

I’m super proud of this number. Honestly, it still surprises me when I see it and think about only having $67k in student loans now. And yes, I use the word only before that because this feels like pennies in comparison to where I was.

It truly amazes me how much more in control I am of my life now that I have paid off a significant amount of my debt.

My student loans defined me when I first graduated. They dictated my life. They decided my fate, not me. I had no choice but to do the things I did after college.

When your minimum payments are $2,000/month and you’re a first year teacher, you have no choice but to do what gets that paid every month and still allows you to eat.

It’s why I moved back to my parent’s house. I needed the low cost of living expenses in a high cost of living area. My salary was way higher than it would have been in other parts of the country as a teacher. I took advantage of it.

Between the higher salary and working so many side hustles, it’s the only way I got to where I am now. Well, that and really intentional spending and money management, of course.

What I’m doing now to pay off my student loans

Right now, I’m focusing on paying off my private student loans. I refinanced them in September 2018 from a 7% interest rate down to 4.97%. This has saved me so much money in interest and I highly recommend refinancing with Earnest, if it’s right for you! Read my post all about deciding to refinance here.

Refinancing isn’t for everyone, but when used to lower your interest rate, it can really help you pay off your debt fast. I personally refinanced $45k and am now down to just under $15k. If you’re interested in refinancing, you can use my referral link to get $200 when you refinance!

With having so much debt, you really need to do what works for you on this journey. It’s hard, but you can do it and you can change your life for the better. I’ve experienced major life changes for the better and I still have $67k left!

What I plan to do

I often imagine how much more my life will improve once I have no debt. The opportunities that I will open up to myself are endless at that point.

It can be done and it will be done. Even during the summer, when I don’t get my salary from my old school.

I’m teaching summer school and VIPKID during the summer to bring in some income. I also have my summer sinking fund to pull from and my leftover money from June.

Yes, my debt payments will decrease this summer. I don’t plan to make any extra debt payments in July. Whatever I have left at the end of August will be sent to debt.

I am a planner by nature, I can’t help it. I’d rather be over prepared than under. So, that’s why I’m not risking it and waiting until I am paid from my new school to send any extra money to my student loans.

This is definitely hard for me. I stay motivated by seeing my debt total go down. It will still decrease because my minimum payment on my private loans is $865 and it doesn’t accrue anywhere close to that amount every month.

But, I won’t be making any crazy progress this summer. Again, it’s okay because I know I will get back on track in the fall. I just need to weather this storm.

Handling six figure non mortgage debt on a single income is a different kind of journey. If that’s you, send me an email! I want to connect with more people who have been or want to be on a similar journey to mine.

How much debt did you start with?

Debt

Paying Off My Student Loans Is Saving Me $12k A Year

How I'm Saving $12k a Year by Paying off My Student Loans

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Everyone considers student loans to be a good debt. And for some people, it absolutely is a great way to get the career you love. But, for others, it may not be the best move.

I know for myself, I didn’t even know what student loans were when I was signing the checks for 5 figures of student loans. Naively, I didn’t even know how they worked and I definitely didn’t know what interest was.

Personally, I was in the fortunate position of never having any other debt than student loans. Unfortunately, this meant that I truly had no idea how debt worked.

I signed myself up for $201k in student loan debt and had absolutely no idea that it meant I’d pay SO much more in interest. And I had no idea that it would completely dictate my life post grad. But, that’s a whole other topic.

Student loans are crazy because they allow young adults to take out mortgage sized debt with high interest rates and little to no education. I was taking out loans for 5 figures, totaling $201k, some with 8% interest, and no education on financial literacy.

This was my fault completely, I take ownership of it. But, I think this is a serious issue. One that needs to be changed ASAP for the future young people in our country.

And now that we’re in this situation, what can we do for all of us drowning in debt. I’m not saying loan forgiveness is the answer, like it has been thrown around lately in the news. It absolutely is not the answer.

We took out the debt, we should absolutely be required to pay it back. But, we can do something to change our situations right now.

I graduated grad school in August 2015 with $201k in student loans, mostly from undergrad. Never once did I expect some program to bail me out. I’ve absolutely worked my butt off to pay off $133k in student loans since graduation.

Once I finish paying these off, I will be saving myself $12k every year, just in interest. I would have originally been paying $12k every year for 20 years, if I didn’t commit myself to paying off my debt.

Do you know how much that is over 20 years? $240k. Of course, some of them would drop off at the end and maybe I’d have refinanced my loans to get a better rate. But, that’s a TON of extra money just getting thrown away, on top of the principle of $201k.

I’m not even including my principle payments in this number. That number would be much bigger. I’m most concerned about the money I’m just throwing away to interest every year. It’s doing nothing for me.

So, how much money are you throwing away to interest every year? I encourage you to find out by looking at your statements and seeing how much goes to interest every payment you make. Or, you can use your tax statement you get every year.

Another way to see your students loans and how much money you’ll put to them is by using undebt.it. It will allow you to see how much money you’ll put to your debt on a normal payment plan, and then what more payments will do to it.

Our society preaches that student loans are good debt. Yes, they can be valuable to better your career, if done correctly, but you need to be careful about student loans.

My question to you is, are you planning to pay off your student loans early? If not, what’s stopping you?

I’ve been in your exact shoes and I’m happy to say that my life is so much better already and I haven’t even finished paying off my student loans.

I still have $67k to pay back, but I can finally breathe now and not feel like I’m totally drowning in debt. You can feel relief, you just need to do the work like I did.

I want to know what’s stopping you from paying off your student loans, send me an email or comment below.

Debt

Debt Free Update: $124,378 Paid Off!

Debt Free Update_ $124,378 Paid Off!

This post may contain affiliate links. Check out my Disclosure Policy for more information.

I feel crazy typing this, but now that I’ve been on this journey for roughly 3 and a half years, I feel so close to being debt free, even though I have $76,718 left. Maybe that isn’t crazy, but I know I’m no where close to being done, it just seems so much more manageable.

I remember when I hit my financial breaking point and absolutely freaking out about just affording my minimum payment on my teaching salary. Now I’m at the point where it’s no longer a stress in my life.

Of course, I still have about $1,100 as a minimum payment every month, but that’s a lot less than the $2,000 it was when I started. My monthly minimum payment would be $1,000 now, if I didn’t refinance.

Yes, I took about a $100 increase in minimum payment, sounds crazy right? But, this allowed me to get an interest rate of 4.97% instead of 7.05%, totally worth it in the long run.

Refinancing isn’t for anyone, but for me and my student loans, it was something I had been working to do for years. I am so happy to have a lower interest rate because so much more of my payment goes to the principal now. If you are considering refinancing your student loans, check out my post that outlines some questions to ask yourself before doing it!

Debt Free Update: Private Loans

I hate all of my student loans, but especially my private loans. I especially hated them when I had my old provider. I will say, I don’t hate them as much since I refinanced them with Earnest back in September 2018. They are awesome to deal with, listen to feedback and actually make the changes, and I am finally seeing actually movement in my pay off of them.

In September 2018, I refinanced $45k of my student loans, which was all of my private student loans. Now, I have $23,981 in private loans, I’ve paid off $21k in 7 months, just in my private student loans! This never would have been possible, if I didn’t refinance my loans, because I was paying so much in interest every month. If you are considering refinancing your student loans, you can use my referral link to get you $200 when you refinance!

Things are very up in the air for the second half of the year for me, my plan is to pay my private loans off by the end of the year. This goal will change depending on how things pan out after June.

Debt Free Update: Federal Loans

My federal loans are still on income driven repayment. I just renewed it and my payment is going up $50 to $300. This is actually a good thing because my loans accrue about that much in interest every month.

While focusing on my private loans, I have been paying the minimums on my federal loans, but making an extra payment every month to make sure the interest is paid off every month. The reason I do this is because I don’t want the unpaid interest to be added to the principal, making the loan increase. This will require me to pay even more in interest and even more in the long run.

This is why it is so important to understand these programs and stop making blind student loan payments. Your payment may be as small as $0 every month, which means your principal is going to increase on your loans. So, yes your loan is in good standing, but you are increasing your principal every single month!

My loan amount doesn’t really change much on my federal loans for now, I’m basically just paying off my interest every month. Right now my federal loans are $52,736. These are broken down in many smaller loans. Once I pay off my private loan, I plan to pay off my federal loans by avalanching the smaller loans based on their interest rate.

Debt Free Plan

I have been going very hard at my goal to pay off this debt as fast as possible. I’ve increased my income, moved back home with my parents, and cut my spending down. Currently, my debt free date is May 2021, which is incredible! It’s amazing what consistent choices over and over can do.

I’m not sure where my debt free journey will go by the end of the year. I have plans to move out, maybe get a new job, I’m okay to slow down my journey a bit to move out of my parents house. I have paid off so much debt, way more than I ever thought would be possible at 26 years old, that I’m okay with it all.

Right now, if I continue with my current plan, I will have just turned 29 when becoming debt free. My goal has always been to have my student loans paid off by my 30th birthday. Right now, I have a nice buffer of time on my side and I feel really good about where I am at with my finances. How is your debt free journey going?

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7 Secrets You Will Not Want To Know About Student Loans

7 Secrets You Will Not Want To Know About Student Loans

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Every since I wrote my post about blind student loan payments, I have been getting a ton of questions about student loans. It is crazy to me that student loan providers are allowed to do the things that they do. It’s absolutely terrible, which is why I think student loans are probably one of the worst debts.

There are so many things people don’t know about student loans, but they let 18 year olds sign their lives away to them. It’s insane! And I was one of them that unknowingly did it! But, I want that to change, I want every person that gets a student loan to know the reality of them.

They can be a tool to use to better your future, but they need to be taken out with education about what these debts really are. Student loans are unlike any other kind of loan, which can ruin people’s financial future.

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1. Minimum payments on student loans don’t need to cover all of the interest.

This is what separates student loans from most other loans. Most loans, you are at least covering the interest that accrues throughout the month. Student loans are completely different. You can be making your minimum payment, but not paying off your interest every month. This will cause your loan to grow and grow and you will never pay it off.

This is why you need to stop making blind student loan payments and check to see if you are paying off at least your interest every month. If you aren’t, you need to make a change in order to ever pay off your student loans.

2. Your student loan interest deduction on your taxes is making you lose money.

We all get wrapped up in tax deductions and sometimes it does financially make sense to make certain money moves that allow you another deduction. But, being able to deduct your student loan interest every year is not helping your financial picture.

I have heard so many people tell me they aren’t rushing to pay their student loans off because they get a tax deduction. You get to claim $2,500 every year, but add up how much you lose every single month to your student loans. Think about how much you’d be saving in a year if you just paid them off. I know for myself, I’d be saving about $40k, way more than the $2,500 I get to deduct.

3. Your family will still be responsible for your student loans if something happens to you.

There are some programs in place for federal loans and some private loans as well, but most student loans are not forgiven in the event that the borrower passes. The crazy part about this is that with most other debt, there is a tangible item attached to the debt. For example, if you have a car loan, your family can sell the car to help with the debt associated with it, similar to a house and a mortgage. With student loans, your education will not help pay for that cost if you pass.

This is important to keep in mind, especially if your parents or other family member cosigned your student loans.

4. Your wages can be garnished, if you’re delinquent on your student loans.

This is a vicious cycle. You can’t afford your monthly payment on your student loans, your wages are then garnished. If a recent graduate has an entry level job and can’t afford their monthly payment, it will be hard to get ahead when their wages are garnished. This is super important to keep in mind if you’re struggling to make your payments each month.

If you are delinquent, they can also garnish any social security benefits, disability benefits, or federal refund checks.

5. In some states, you can lose your driver’s license for not paying your student loans.

This is different in every state, but it’s something to keep in mind. This is yet another vicious cycle. If you lose your driver’s license, it then may be hard for you to get to work, if you live in an area that doesn’t have public transport.

6. In some states, you can have your professional license suspended for not paying your student loans.

This would prevent you from working in the field that you took the student loan out for. Which would prevent you from making a payment on your student loans potentially. This would prevent you from turning things around and getting back on track to paying your student loans.

7. You can be sued for not paying your student loans.

In the event that you are not paying your student loans, you can be sued by the company. This happens much more frequently with private student loans because they don’t have programs in place to help borrowers afford their monthly payment. However, they also don’t have programs that can grow your student loans, like I mentioned in number 1.

I encourage all of you to get educated about your student loans. Ask questions, do research, know what your student loans mean. If you haven’t taken any out yet, but are thinking about it, understand the reality of them and consider alternate plans. If you’re struggling to make your payments, get on a budget and get on a better financial path, so you don’t have to deal with any of what I mentioned above. How have you helped yourself to learn more about student loans?