I started this blog to document my thoughts and to do research about paying off my student loans. I search frequently on the internet and other media resources for stories of why and how other people have successfully paid off student loans. As a teacher, the amount of education decides how much you can earn each year. When the No Child Left Behind Act of 2001 defines highly qualified as a teacher with a Master’s Degree this was a determining factor during the economic collapse of 2007-2008 whether or not you kept your job as a teacher. Between 2004 and 2017 I earned 3 graduate degrees and my annual pay never decreased because I was constantly column jumping because of my graduate degree progress. There were also tax advantages because of the school tuition deductions and interest accumulations. So was it worth it?
In the current school district with a BA, my pay would have been frozen at $51, 952 after five years of service. But with almost 15 years of service and a doctorate, the annual salary is approximately $93,000 for 186 days of work during the school year. Currently, a doctorate earns an additional $91 dollars a month which doesn’t help much for repaying the student loans. So while I am working everything is just fine. But looking forward to retirement with a student loan does not look so good at all. If I die then the wife does not have to worry about the debt under current statues. But the current administration presents some worries that prompt this former student to look at ways of paying off the debt in seven years.
Teacher Loan Forgiveness
As a math teacher, I was anticipating getting my loans partly forgiven. After completing my Masters I submitted for loan forgiveness and was denied because my school district had opted out of Title I status. No Title I no loan forgiveness at least that is what I was told. The only other way of loan forbearance is to become a lifetime learner. If you stay in school you never make any payments and I know of quite a few teachers who were turned down for forgiveness just enrolled back into school to delay paying. But this is only a delay because he or she can NEVER retire. Lesson learned is to not trust anyone but make plans to pay off the loan somehow and someway.
Paying Off Your Student Loans
Debt can feel like a weight pressing down on you, but ignoring it doesn’t make things any better. To chart a path out of debt, the first step is figuring out how much you owe. Most people have a vague idea of how many loans they have, but many avoid facing the total head on.
The only way to get control over your finances is to take a full inventory. Add up all of your student loans, credit card balances, car loan balances, lines of credit, overdue bills, and other debts. The grand total can come as a shock, but once you know exactly what you’re dealing with, you have several avenues to explore — increasing your income, cutting back your spending, and decreasing the sum that you owe.
The last is the one that people overlook most often. But some debts, like medical bills, can be negotiated down. High-interest credit card balances can often be transferred to a new card with a 0% introductory APR. And student loans can often be refinanced or consolidated, saving thousands of dollars over the life of the loan.
8 Tips to Help You Pay Off Student Loans Faster
Paying off student loans isn’t easy, but the following strategies can help you get out from under your debt faster.
1. Refinance for a better rate
Don’t pay more interest than necessary. Refinancing or consolidating your loans could cut hundreds of dollars off of your monthly payments and save you tens of thousands of dollars over the life of your loan. Most federal student loans charge everyone the same percentage, a one-size-fits-all interest rate that is often higher than what private lenders offer, because it has to account for high-risk applicants who are more likely to default or not finish their degrees. People who have built up their credit in the years since graduation are often better off getting a new loan on their own merits. A recent review by the National Student Loan Union found that people who refinanced saved an average of $259 a month and $19,231 over the life of the loan. Some borrowers saved more, and some less, depending on the size of their debt and their credit histories. But the average amounts were pretty staggering.
2. Make extra payments any time you can
With most lenders, there is no penalty for paying early. So any time you have extra money – for example, if you get a tax refund, a bonus at work, or have a month with a third paycheck – it’s smart to make an extra loan payment. Someone with $35,000 of student loans and an interest rate of 6.8% would typically have to pay about $400 a month for 10 years to get out of debt. Adding an extra $100 a month would cut the payoff time by about 2½ years and save $3,583 in interest.
To get the most benefit from your extra payments, be sure to put them toward your highest interest loans first. Start by logging in to the Federal Student Aid website to find out your federal loan interest rates. If you have private loans, contact your student loan servicer to find out your rates. Rank them accordingly and put extra money toward the highest rate loans first.
3. Make a 3- to 5-year plan
It’s easier to make budget sacrifices when you know that it’s temporary. Focus on the end date of your loan, and consider doing things like living with a roommate or keeping an older vehicle until then. Returning to the nest, eating Ramen noodles, and embracing the college lifestyle for a bit longer might not sound that appealing, but committing to your goal will make it all worthwhile.
4. Set up autopay
You’re less likely to overspend if you schedule your loan payments to be debited as soon as you get paid. You won’t miss the money as much if you “take it off the top” and don’t see it in your account. Also, most lenders will give you a 0.25% interest rate discount when you sign up for automatic debit.
5. Explore freelance and “side hustle” opportunities
Doing freelance or part-time work can help keep debt down during and after college. Whether it’s photography, dog-walking, web design, or catering – anything you can do to earn extra money will get you out of debt faster. Sites like Upwork, iFreelance, and Project4hire have a wide range of short-term and long-term projects. You can also participate in the sharing economy with companies like Uber, Lyft, Airbnb, and TaskRabbit. Earning an extra $500 a month could cut your payoff time by 5 years or more, depending on how much you owe.
6. Use the buddy system
The buddy system is not just helpful for exercising or losing weight. A lot of people find paying off student loans easier if they have an “accountability partner” who shares the same goals. Things like shopping or going to happy hours can sabotage your financial plans. A buddy can help you stay motivated to cook at home, pursue extra income, decorate with “upcycled” thrift finds, travel cheaply, and avoid splurges. With a little creativity, it can also be fun. You can also read debt success stories and subscribe to couponing and savings blogs.
7. Don’t be afraid to ask for a raise
If you’ve been at your job for a while, you’ve been giving 100 percent, and especially if you have an annual review coming up, consider asking for a raise. Start by keeping track of ways you’ve helped your company save money or make money. Do some research about salaries in your industry and how yours compares. A week or so before your review, schedule time with your boss to discuss your goals with the company and make your case for a raise. They might say no. But if they say yes, you will get a bigger paycheck.
8. Monitor your credit score
Paying your student loans on time each month helps you establish a good credit history. It’s smart to monitor your FICO score for a variety of reasons like buying a car or home, and protecting yourself against identity theft. But as your score rises, you also might qualify for lower interest rates on your outstanding balance – particularly once your score gets above 700. Everyone is entitled to a free credit report every 12 months. You can check yours at https://www.annualcreditreport.com.