Loans

I paid off some of my loans in December of 2017. I was 6 months out of grad school and COULD NOT believe how much I was supposed to pay back in interest alone to these people if I followed the recommended payment plan. This was mainly because of Capitalism, but also when I applied and received my loans my credit score was low (nonexistent). If you’ve heard of parents opening credit cards for their children, this is why. Although stressful to manage, if done responsibly it could benefit them. I digress. I had no credit and a family friend agreed to co-sign, this was a huge help and got me approved. However, my interest rates were in the 5-7% and it did not help that I had to take out loans for all 4 years of my undergrad experience.

So how did I manage the first sentence above? Navient, my lender, sent me this message: “Afua, congratulations on paying off your student loan, and we applaud your success. In today’s world, it’s not always easy to manage debt, use credit wisely, and keep up with the demands of your career and personal life. But you’ve done it, and we applaud your success.” They proceeded to ask me to share how I did it with others. When I got this message I was mad “Bruh, if you know it’s so hard to pay this off WHY are you enabling it!!??”

Anyway, so how I did it?!

My brother is four years older than me, so I had sort of a blueprint for figuring out my financial aid track. Going into college I would say I was somewhat financially literate if not average. I was aware of my middle-income plight; on paper, I was too rich to receive a ton of financial aid, but in reality not rich at all. This is where I pause and say: Kids, apply for scholarships, even if you don’t think you meet all the stipulations. I received some scholarships but not enough to cover the 60k+ a year tuition bill.

The simple math of compounded interest, interest on interest, plus me trying to build my credit resulted in me paying off my interest while in college. If your loans are subsidized, you will not have interest while in school, the government pays them for you. My first year, my loans cost about; $50 a month by the time I graduated it was upwards of $300. I also set up automated payments which gave me a % discount every month, it wasn’t huge but every penny counts.  I worked all through school and paid off my interest monthly, by the time I graduated I only had the principal balance (the original amount I took out) to pay off, plus any additional interest that would build on that. This is still, trash…but, it’s better than compounded interest added to my principal then paying interest on that new sum. 

(Simple Ex. if my loan was originally 5k, and every month I paid $25 in interest 4 years later I would have paid $1,200 in interest and still have the 5k original loan. If I did not do that the 5k turns into 6,200 and I’ll have to pay interest on $6200 going forward. In the long run, it gives more money to the lender, a.k.a less money for you)

Luckily I did not have to pay for grad school, however, I still qualified for loans. I ended up taking the loans because they were a lower interest rate than my Navient loans. So I paid off my Navient loans with this new loan. Leaving me with an average interest rate of 3.5% wayy more manageable.

My loans are not totally paid off,  they are all currently under one loan provider, which is really helpful. Having to log onto several portals to see how much debt you owe is not fun and keeping track of all those payments is a hassle.

I am currently enrolled in the Public Service Loan Forgiveness (PSLF) program, so hopefully, I can lay low paying off interest every month, or whatever minimum is acceptable until I reach my 120 payments. 2028 I’m coming for you.

Student debt is overwhelming and there are many ways to tackle it. I still feel a lot of anxiety over paying the minimum and seeing this huge number, but I keep telling myself “why pay all this money, you don’t have, when you already have a plan”. I think having a plan is all that matters whether it is to pay off as soon as possible or follow a payment plan.

Throughout the process big-up yourself, every time you make a payment do a dance. When you close a loan get that Ice cream. When it’s all said and done have a celebration.

Random things to reduce cost while in college (please note all these options, especially considering overall well being, might not be feasible for everyone)

• Use your school, ask for all the support through Financial aid and by communicating to and with student affairs staff
• A resident assistant ( will either cover room and food or pay you) – this can affect your financial aid so be cautious
• Work
• Graduate quicker ( Come through AP courses, IB, College credit etc.)
• Go to a less expensive school ( just because its expensive does not mean it’s were you should go for the best education/ experience)
• If you live off campus, live with roommates
• Meal plan, some schools mandate you buy their meal plan others have dorms with kitchens. Everything costs money, find the cheapest and healthiest route. Maybe opting for a kitchen might be cheaper but not the best if you can’t afford groceries, so a meal plan that would guarantee you eating might be best overall)

Ways To manage student debt:

• Pay of interest monthly
• Never miss a payment
• Pay extra when you can  ( tax refund, birthday money, summer job etc)
• Consolidate loans
• Refinance
• Sign up for promotions ( automatic payment)
• Ask about repayment plans – ( pay lower monthly payments. Income driven, etc)
• Pay highest cost loan first ( this could be the loan with the highest interest or just higher amount)
• Upromise gave me money back everytime I paid my loans. ( In total I think I maybe got $200, not much but still something. Idk how or when I signed up for this but one day I got an email to cash out my balance)