Graduated Learning: Life after College

I got my degree, I got a job…now what?

Let’s Talk About Student Debt: Part 2: Digging Out June 2, 2012

Filed under: Careers,Personal Finance — Stephanie @ 10:56 pm

I went over how I was able to load myself up with student loans.  Now for a few ways that I think I was able to work my way out from under them.

I earned money to pay off the debt:

I picked a major with decent potential future returns.  I know that a lot of people don’t want to just go with a major that will make them a lot of money.  I know money isn’t everything (even if that’s what I blog about all the time), but it’s important to consider your potential earnings compared to the debt you’re taking on.  Yes, lower paying jobs can also be rewarding.  But until employers recognize the importance of these other, less lucrative careers, taking on a lot of debt to get there is a dangerous game.

I got a job every summer.  The summer after freshman year, I didn’t have my act together as much as many of my classmates.  While they got internships or summer research positions, I was stuck working at the mall near my parents’ house.  On the upside, I was able to live rent-free with my parents.  And I got some cute clothes at a discount from the store I worked at.  On the downside, it was not really a resume builder, and it was painfully boring and not at all mentally stimulating.  This experience would often come back to me whenever I thought about giving up on school.  Whenever I wanted to quit, I’d think back to how much I hated my summer job, and I’d get back to work.  Way better to finish college than be stuck doing what I hated for the long term.

My summers after sophomore and junior years, I worked at summer internships in the materials field.  Both jobs were interesting, and I learned a lot more about materials processing and analysis.  And it looked pretty good on my resume!  Plus, the internships (and reports I later presented about them) fulfilled a degree requirement that I would have otherwise had to write a thesis for.  So, gain experience, get paid, and get closer to my degree?  Excellent.

Besides trying to make more money, I also took advantage of any way to lower my interest rate or principal.

I consolidated my public loans right before an interest rate was set to go up.  I didn’t actually know what I was doing then, but I was told to do it before the end of June.  So I did.  I wish I knew more about loans then.  Sometimes consolidation will get you a better interest rate.  It will help you keep track of all your debt in one easy payment instead of multiple payments.  But it’s not always a best plan.  Like I said, I wish I knew more.  I think I did the right thing, but I don’t know if it was.  But it was too late to go back after I did it!

I signed up automatic debit, which lowered my interest rates by .25%.  And then continued to pay on time (through automatic debit) for long enough that they lowered my rate by another .50%.  And by luck, my private loans were pegged to the fed rate, so my interest rate dropped with the crumbling economy. :/  Check with your lender/loan servicer to see what discounts or other payoff options are available to you.

I (occasionally) paid extra on my loans.  I went  for the loan with the highest interest rate, and then I paid down the principal as much as possible.

I know none of these steps are earth shattering.  I just figured it was important to follow-up my first post with the ways that I’m dealing with the debt.  It still is a lot to pay off (I still owe a bit less than $29k at 2.75%), but I just keep paying the minimum, plus any extra I can to keep whittling away the principal.

I wish I had been paying extra towards the principal the entire time.  Especially back when the interest rate on my private loans was around 8.5%.  As this post on ImpulseSave’s blog says:  Pay off your student loans now, not later! But I didn’t know better.  Which is why I’m glad I’ve learned a lot about personal finance since graduation.

So, what have you done to help dig yourself out of debt?  What did you wish people had told you?

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2 Responses to “Let’s Talk About Student Debt: Part 2: Digging Out”

  1. $29K is a big sum but at 2.75% interest rate that’s not bad at all.

    I’m trying to follow all of those steps you listed as best I can too ;) hopefully I can be student-debt free by the end of next year!

    • Stephanie Says:

      Yeah, it’s a pretty big sum! But a lot less than the ~$58k I graduated with. Very grateful that the interest rate is so low!
      That would be awesome if you eliminated all of your debt by the end of next year! Go go go! :D


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