{"id":23613,"date":"2018-04-05T10:52:00","date_gmt":"2018-04-05T14:52:00","guid":{"rendered":"https:\/\/www.tun.com\/blog\/?p=23613"},"modified":"2024-05-09T08:31:37","modified_gmt":"2024-05-09T12:31:37","slug":"pay-off-student-loan-debt-fast","status":"publish","type":"post","link":"https:\/\/www.tun.com\/blog\/pay-off-student-loan-debt-fast\/","title":{"rendered":"How I Paid Off $27,000 in Student Loans in 3 Years (And How You Can Do Better!)"},"content":{"rendered":"\n

In May of 2015, I graduated from college with $27,000 in loans — <\/span>not terrible, but much more than I would have liked<\/span><\/i>. When I stepped into the \u201creal world,\u201d paying off the loans was the <\/span>last<\/span> thing on my mind. In fact, it didn\u2019t hit me until I got a friendly reminder in November of 2015 that my “grace period” was about to end.<\/span><\/p>\n\n\n\n

A grace period<\/strong> is the period of time (usually six months) after your graduation, when you are not required to make payments on your student loans.<\/span><\/p>\n\n\n\n

Luckily, I was offered a job right out of college, so I was able to make monthly payments beginning January of 2016. <\/span><\/p>\n\n\n\n

By December 2018, I was able to part ways with student loans forever. <\/span><\/p>\n\n\n\n

So, how was it (or is it) possible to pay off <\/b>$27,000 + interest<\/b><\/span> in three years<\/b>, all while still enjoying overpriced meals in New York City, occasional splurges, and did I mention — independence (from the parents)?<\/span><\/p>\n\n\n\n

READ ON TO FIND OUT — below are three tips I offer to all who have loans to pay back.<\/b><\/p>\n\n\n

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\"Student<\/figure>\n<\/div>\n\n\n

1. Take advantage of your grace period<\/b><\/h2>\n\n\n\n

Almost every college graduate is given a six-month \u201cgrace period,\u201d during which the lender graciously sits back and waits for the no-longer-students to get their real-life-game-plan on. <\/span><\/p>\n\n\n\n

During the grace period, THERE IS NO INTEREST.<\/b><\/span> (Now <\/span>that’s<\/span><\/i> what I call GRACE.) <\/span><\/p>\n\n\n\n

Had I known what I know today, I would have <\/span>definitely<\/span><\/i><\/span> taken advantage of the grace period (back then, I didn\u2019t). <\/span><\/p>\n\n\n\n

Here’s a simple, yet often untold PRO TIP for all recent college graduates: <\/span>PAY OFF AS MUCH AS YOU CAN <\/b>before<\/i><\/b><\/span> interest piggybacks on your loan. <\/b><\/p>\n\n\n\n

2. Understand your loans<\/b><\/h2>\n\n\n\n

As someone who has been out of college for over four-and-a-half years now, the below statements are no-brainers<\/strong>, but for recent college grads, these may not be so obvious … hence I spell them out:<\/span><\/p>\n\n\n\n

    \n
  • The higher<\/em><\/span> the interest rate on a loan, the faster<\/em><\/span> you want to pay it off.<\/span><\/span>

    \u00a0<\/p>
    <\/li>\n\n\n\n

  • The long<\/span>er<\/span><\/em> the repayment period (say 10 years vs. 5 years), the higher<\/em><\/span> the net amount you are paying (because interest accrues over time). <\/span><\/li>\n<\/ul>\n\n\n\n

    While it might be tempting to select the standard 10-year repayment plan and then just sit back and relax, doing so will put you in a vicious cycle, where a <\/span>big chunk of your payments go to pay off your interest and <\/b>not<\/i><\/b><\/span> your principal balance<\/b> (the amount you actually borrowed). <\/span><\/p>\n\n\n\n

    Here is a golden rule<\/strong>:<\/span> pay off the loans with the high interest rates first, NOT the loans with the smallest amount (remaining)<\/span>. This is what they call the <\/span>avalanche method<\/b><\/span>.<\/span><\/p>\n\n\n\n

      \n
    • Make minimum monthly<\/span><\/em> payments as required by the lender.<\/span><\/span>

      \u00a0<\/p>
      <\/li>\n\n\n\n

    • Put extra money toward the loan with the <\/span>highest interest rate<\/span><\/i><\/span> until it is paid off, and then move on to the loan with the next highest interest rate.<\/span><\/span>

      \u00a0<\/p>
      <\/li>\n\n\n\n

    • The avalanche method has <\/span>practical benefits<\/span><\/em> — it <\/span><\/span>will save you the most money on interest over time.<\/li>\n<\/ul>\n\n\n\n

      If, however, you have two loans with the same interest rate but different amounts, target the loan with the LOWER amount first<\/span>. This is what they call the <\/span>snowball method<\/b><\/span>. <\/span><\/p>\n\n\n\n

        \n
      • Make minimum monthly<\/span> payments as required by the lender.<\/span><\/span>

        \u00a0<\/p>
        <\/li>\n\n\n\n

      • Put extra money toward the loan with the lowest balance<\/span> until it is completely paid off, and then move on to the loan with the next lowest balance.<\/span><\/span>

        \u00a0<\/p>
        <\/li>\n\n\n\n

      • The snowball method has psychological benefits <\/span><\/em>— the sense of achievement you feel when you pay off one loan will motivate you to pay off the debt faster!<\/li>\n<\/ul>\n\n\n\n

        3. Be strategic and smart about financing options!<\/b><\/h2>\n\n\n\n

        Many automatic payment systems are sneaky, and will distribute your monthly payments unevenly<\/em> to your disadvantage (student loans are a business too, you know!). <\/span><\/p>\n\n\n\n

        Here are ways you can outsmart them:<\/b><\/p>\n\n\n\n

          \n
        • Pay only the minimum<\/span><\/em> amount for the automatic<\/span><\/em> monthly payments (not the amount they suggest or recommend).<\/span><\/span>

          \u00a0<\/p>
          <\/li>\n\n\n\n

        • Whenever you can, make additional, targeted<\/span><\/em> payments towards loans with the highest interest rate (or, when interest rate is the same, towards the one with the lower balance).
          <\/span>\n
            \n
          • Simply put, apply the avalanche method + the snowball method towards your extra, targeted payments.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n

            The bottom line<\/strong><\/p>\n\n\n\n

            When it comes to paying off your loans, there is no magic formula. You just need to be <\/span>consistently diligent<\/i><\/b> and <\/span>diligently consistent<\/i><\/b>. While you shouldn\u2019t pull your hair out trying to get rid of your loans (they <\/span>will be there for a while), make sure to do all of the above! Put extra income or holiday bonuses toward your loans, and you will be out and about in no time. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

            In May of 2015, I graduated from college with $27,000 in loans — not terrible, but much more than I would have liked. When I stepped into the \u201creal world,\u201d paying off the loans was the last thing on my mind. In fact, it didn\u2019t hit me until I got a friendly reminder in November […]<\/p>\n","protected":false},"author":2,"featured_media":38430,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_uag_custom_page_level_css":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[661,4,611,228,607,672],"tags":[],"class_list":["post-23613","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ace-college","category-student-discount","category-loan-management","category-student-guide","category-student-loans","category-student-loans-ace-college"],"aioseo_notices":[],"uagb_featured_image_src":{"full":["https:\/\/www.tun.com\/blog\/wp-content\/uploads\/2020\/01\/money.jpg",833,533,false],"thumbnail":["https:\/\/www.tun.com\/blog\/wp-content\/uploads\/2020\/01\/money-225x144.jpg",225,144,true],"medium":["https:\/\/www.tun.com\/blog\/wp-content\/uploads\/2020\/01\/money-300x192.jpg",300,192,true],"medium_large":["https:\/\/www.tun.com\/blog\/wp-content\/uploads\/2020\/01\/money.jpg",833,533,false],"large":["https:\/\/www.tun.com\/blog\/wp-content\/uploads\/2020\/01\/money.jpg",833,533,false],"1536x1536":["https:\/\/www.tun.com\/blog\/wp-content\/uploads\/2020\/01\/money.jpg",833,533,false],"2048x2048":["https:\/\/www.tun.com\/blog\/wp-content\/uploads\/2020\/01\/money.jpg",833,533,false]},"uagb_author_info":{"display_name":"Yoora Park","author_link":"https:\/\/www.tun.com\/blog\/author\/yoora\/"},"uagb_comment_info":0,"uagb_excerpt":"In May of 2015, I graduated from college with $27,000 in loans — not terrible, but much more than I would have liked. When I stepped into the \u201creal world,\u201d paying off the loans was the last thing on my mind. In fact, it didn\u2019t hit me until I got a friendly reminder in November…","featured_media_src_url":"https:\/\/www.tun.com\/blog\/wp-content\/uploads\/2020\/01\/money.jpg","_links":{"self":[{"href":"https:\/\/www.tun.com\/blog\/wp-json\/wp\/v2\/posts\/23613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.tun.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tun.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tun.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tun.com\/blog\/wp-json\/wp\/v2\/comments?post=23613"}],"version-history":[{"count":1,"href":"https:\/\/www.tun.com\/blog\/wp-json\/wp\/v2\/posts\/23613\/revisions"}],"predecessor-version":[{"id":77296,"href":"https:\/\/www.tun.com\/blog\/wp-json\/wp\/v2\/posts\/23613\/revisions\/77296"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tun.com\/blog\/wp-json\/wp\/v2\/media\/38430"}],"wp:attachment":[{"href":"https:\/\/www.tun.com\/blog\/wp-json\/wp\/v2\/media?parent=23613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tun.com\/blog\/wp-json\/wp\/v2\/categories?post=23613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tun.com\/blog\/wp-json\/wp\/v2\/tags?post=23613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}