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How I paid off $130,000 in student loan debt

Key takeaways

  • Before taking out student loans, make sure you understand the financial consequences.
  • If you have federal loans, you might qualify for income-based repayment programs that offer you a relatively low monthly payment.
  • Paying off student loans could help teach you about budgeting, debt management, and setting money goals.

I graduated in 2014 with a degree in communications and $130,000 in student loan debt from my private college. Over the course of 9 post-grad years, I prioritized making my loan payments above all else, but I didn’t sacrifice so much that my 20s were miserable. Here’s how it all went down.

Taking out student loans

In high school, my parents were adamant: If I wanted to attend private school, I’d have to help pay for it. Being the oldest, my parents didn’t know much about paying for college—and neither did I. I didn’t apply for grants or do nearly as much research as I could have when I first started applying to colleges. Upon admission, I should have asked my college for more money than they granted me. Instead, I took out 4 government loans and 2 private loans.

While I was in college, my mom paid the interest on our Parent PLUS Loan. I worked odd jobs in retail and restaurants to pay down the interest on my government loans. This helped keep the interest from snowballing. By the time I was a college junior, I had paid internships to help buffer the monthly loss that went toward loan interest. Still, I was able to plan a cross-country trip in 2013. But I remember thinking: I can’t spend more than a certain amount because of my monthly loan payment. With debt, it’s always at the back of your mind.

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Making a dent in my student debt

When I graduated and started my career, my early salaries qualified me for income-driven repayment plans, which gave me a low monthly minimum payment. I wasn't exactly living on ramen noodles, but for years my top priorities were my rent and loans.

I didn’t deny myself everything else—I bought new clothes for work, and I went to a bachelorette party in Las Vegas, for example—but I skipped a lot of weddings because they were too expensive. I always asked myself, Will I regret spending this money later? I was a strict budgeter and tried to prioritize money moves that would keep me in good standing with my debt and overall finances.

I also educated myself. I watched online videos about how others navigated their student loan debt. I read finance articles and tuned in to business news most mornings. I scoured the FAQ sections of government loan site for proof that I was making the right financial choices. I asked for guidance from the trustworthy adults in my life too.

As my income grew, I continued socking away most of my paychecks, plus Christmas money and tax refunds. I stashed it all in an account that earned interest with the plan to eventually wipe out my loan balance all at once with what I’d saved.

In January 2020, I consolidated my federal and private loans so I would have a single monthly payment instead of multiple. Unfortunately, because only federal loans are eligible, consolidating them with my private loans meant that I didn’t qualify for the pandemic payment pause and potential future forgiveness. However, consolidating my loans at a lower interest rate made me feel more in control of my debt. My new payment was $667 every month.

I also claimed the interest on my taxes when I could, and upped my payments as soon as I could to chip away at the principal even more.

Finally paying off my student debt

A few months into the pandemic, my husband and I relocated where the cost of living is relatively affordable. This allowed me to save money even faster. We have always lived simply—no kids, no mortgage, 1 car, and a dog. And only I had student loans—my husband went to a much cheaper school than I did. So our bills were on the lower end.

By February 2023, my loan balance was $88,000—and in the 9 years since I had graduated, I had nearly that much saved for paying it off. When my grandpa passed away, he left me an inheritance. I used $15,000 of it, plus my own savings, to finish paying off my student loan debt in one fell swoop.

By the time my payment cleared, roughly $400 of interest had already accrued. So I paid that off before receiving one final bill for $9.36.

Naïvely, I thought my loan servicer app would blow up with a big “CONGRATS!” The reality was less exciting. You don’t even get confirmation that you’re done—you get a “paid in full” email within 7 to 10 business days. Congrats?

Budgeting after paying off student loans

I try not to think of what else all that money could have been used for, but I like to believe it all worked out. Budgeting for my loans taught me how to live small and be creative and how to set actual financial goals. I have a nephew, and I add to his college fund because I don’t know what costs are going to be like by the time he goes to school.

Now that I’m at a point where I have extra income each month, I think, How can I be smart about this? My husband and I now work with a financial pro who tells us how to invest. It’s forced me to evaluate how I want to fund other big things in the future, such as a house or a second car, so right now we’re in saving and investing mode.

When I graduated high school, my grandfather wrote me a check for $2,500. I still have that $2,500 in my savings account. When I paid off the loan, it felt full circle. He helped me start my education and then helped me close it.

Olivia Armstrong is a freelance writer who lives in upstate New York.

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