I wanted to talk today about my student loan debt and how I have dealt with it since graduating. When I finished my MBA program at the age of 25 my total student loan debt was $118,542.87. It was as much as a small mortgage. I had a total of 12 different loans ranging from federal loans to private loans with interest rates ranging from 5%-13%. The private student loan had the highest interest rate at 13% fixed. As pissed as it makes me think how Citizen’s Bank was ripping myself off and a lot of other students I need to thank them because it was the lowest interest rate at the time out of any of the other big banks. This was the first loan that I had paid off because it was $14,743.67 at a fixed interest rate of 13%. Citizen’s Bank was making a lot of money off me in interest each year just from this one loan. Where can I find an investment like that?
A depressing reality of postgrad life is that you’ll need to make room in your budget for your student loan payments. I pay more than the minimum monthly student loan payments each month which comes to around $600 per month. A lot of the time I am paying more than $1,000 each month towards it. I have other investments that I am working towards which I am achieving higher interest rates but these keep bothering me. The real wake up call was when doing taxes this year and receiving the 1098-E slip in the mail which tells you how much interest you have paid on your student loans for the year which you can use to write off your taxes. I was shocked.
This was the amount that went to in INTEREST on my student loans. Just to think that I had been working very hard to pay towards my student loans last year. I had paid this much in interest. I was unbelievably pissed off to see that figure. The worst part about federal loans is you can’t just call up the government and ask to refinance because rates are still at all time loans. You’re stuck with the fixed interest rate unless you want to consolidate with a private lender. The good thing is this has now motivated me to pay down as much as I can on my student loans this year.
So how much do I have left?
$17,077.01 @ 6.210%
$21,814.75 @ 5.410%
$5,413.18 @ 3.4%
$5,558.70 @ 4.5%
$3,448.14 @ 5.6%
$2,913.34 @ 6.0%
$6,555.53 @ 5.0%
$8,823.12 @ 5.0%
The method that I will be using to pay these off is the debt avalanche method. The two amounts in bold are the ones that I will be tackling first as they have the highest interest rates. Part of having this section of my blog is I want to keep myself accountable on paying towards these loans. I feel as if having these student loans have been holding me back from accomplishing more in life so far. Each and every month a large portion of my paycheck just keeps going towards them. Not to be cynical about it but I personally believe that the value of a degree in America is declining. The longer I pay towards my student loans the more I forget what I even learned in school. Honestly does anyone remember what they learned in their first two years of college?
I could rant on and on about this topic but I will save that for another day. For now it is time to grind and pay down as much student loan debt as possible in 2018.