Hi! I’m a 30-something Mom of two, working from home as a full-time freelance writer. I’m recovering from debt accrued as a result of my divorce, and working hard to pay student loan debt off, too!
Many of us are in massive amounts of student loan debt. I went to school online in the early 2000s, and I’m nowhere near paying those loans off. Here’s how I have made progress paying off student loan debt.
Paid Off a Private Loan First
I had a private student loan, thankfully a small one, which didn’t qualify for the same repayment options as my federal student loans. Because it was less than $2,000, I put the bulk of my repayment efforts toward that loan before beginning to focus on my efforts on my federal loans.
Consolidated My Loans
The first thing I did was do a student loan consolidation, so I have one payment for my subsidized loans and one payment for my unsubsidized loans. The loan consolidation also lowered my overall interest rate so I’m paying less than I would be had I not consolidated in the first place.
Entered an Income-Based Repayment Plan
Because I freelance, my income is not consistent and often not regular. Under a standard repayment plan, I’d be responsible for $400+ a month, and failure to meet that obligation would tank my credit.
That’s why I chose to enter an income-based repayment plan, giving my student loan servicer access to my IRS tax data every year. Now, I have a much lower payment obligation, so that during months when money is a bit tighter, I can still make my payment and keep my credit in good standing. Most months, I can pay well over my required payment so that I’m chipping away at the principal balance, too.
Plus, as long as I maintain my repayment plan by re-certifying every year, and making on-time payments, I can have any remaining balance (which I hope will be none!) discharged at the end of 25 years. Considering I’ve been on this plan for the last five years, I’ve got 20 to go.
Signed Up for Auto-Pay
My student loan servicer offers a small interest rate decrease (.25 of a point) in exchange for signing up for auto-pay. It’s not a lot of savings, but I don’t have to worry about taking time out of my day to make sure I make the payment. And this way, there’s never a chance I’ll forget to make the payment by the due date. I just make sure there’s enough in my checking account to cover it – and it’s all taken care of for me. I make extra payments manually.
Started Lowest Balance First
One of my student loan balances is in the 10s of thousands, while the other is just under $1,000. Tackling the smaller one first will make me feel like I’m making actual progress. If I focus on the biggest loan, I will feel overwhelmed and not stick to my plan.
Any extra cash I have at the end of the month after my expenses are paid goes to my student loan debt. Since I have so much, it’ll be at least a decade before I’m out from under it, but that’s better than the rest of my life!