Student Debt

My 736 Day Student Loan Payoff Story

Eric Rosenberg
Written by Eric Rosenberg

In most ways, March 23, 2012 was like any other day. It was a Friday morning. I woke up around 6:00 am to an alarm. But as I was getting ready for work, I logged into my computer to check my account balances. It was a ritual every other Friday on payday. But this week something different happened.

I looked at my bank account balance and saw it had grown to exceed my remaining student loan balance! Two years and six days after graduation, I was ready to make my final student loan payment. I didn’t get there making only minimum payments. Instead, I used a focused approach to strategically eliminate my $40,000 student loans. Follow along to learn how it all came together.

Start paying while still in school

The first step I took to paying off my student loans was to start paying during school. Unlike most of my classmates, I kept a full-time job while going to school full-time for my MBA. A combination of an understanding boss and a complete focus on schoolwork on evenings and weekends made it a possibility.

My loans were all government back Stafford Loans. One-third of my loans were subsidized and did not incur any interest during school. Two-thirds were unsubsidized and began accruing interest right away. I focused my efforts on those loans while in school.

I didn’t make big payments and there was no minimum payment, so I just made sure to pay at least the interest, if not a little more, every month. I kept this up until my last quarter (my university ran on the quarter system) when I made my last tuition payment and took on my final loans. At that point, I started making more aggressive payments.

Pay more than the minimum

When I graduated in March 2010, I went into full payoff mode. I lived in a low-cost house with a roommate for most of my MBA program to keep costs down, and eventually moved into a small one-bedroom apartment far from downtown to keep my rent low.

Keeping all of my expenses low and living on a college style budget while working a full-time job as a Financial Analyst allowed me to pay a lot more than the minimum payment each month. I also split my payment into a smaller payment every payday instead of monthly to keep my income in-line with my expenses.

I started paying half of my loan payment automatically every payday and slowly increased it. I eventually surpassed the full payment amount twice each month and did everything I could to increase that payment.

That meant I didn’t spend as much as friends on cars, housing, eating out at restaurants, and buying fancy gadgets. I didn’t buy a smartphone until most of my friends already had one to save money.

In addition to making payments a little easier, paying every other week instead of monthly gives you a full extra monthly payment each year in many cases. If you get 26 paychecks per year and pay automatically on payday, you’ll get this added 13th month payment!

About the author

Eric Rosenberg

Eric Rosenberg

Eric Rosenberg is a finance, travel, and technology writer originally from Denver, Colorado living in Ventura, California. When away from the keyboard, Eric he enjoys exploring the world, flying small airplanes, discovering new craft beers, and spending time with his wife and baby girl. You can connect with him at his own finance blog Personal Profitability.

Leave a Comment