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My $38,000 Student Loan Payoff Plan

Last Updated: BY Michelle Schroeder-Gardner - 106 Comments

Disclosure: This post may contain affiliate links, meaning I get a commission if you decide to make a purchase through my links, at no cost to you. Please read my disclosure for more info.


My $38,000 Student Loan Payoff Plan$40,000.

That’s the total amount of student loans that I accumulated while I was getting my undergraduate and graduate degrees. The amount that is left is still at $38,000 now, mainly because I haven’t really bothered with student loan repayment (even though I should have!) and interest has stupidly been building up. I would have taken out more in student loans but the last couple of semesters I wised up and paid for in cash instead.

It is a lot of student loan debt, but I don’t feel completely horrible about it, I did earn 2 undergraduate degrees and a Finance MBA all for that amount. If I wouldn’t have earned scholarships or paid some of it, it would have easily been 3 or 4 times that amount.

I’ve been talking a lot about my plan to payoff my student loans as fast as possible. Back in February of 2012, I started my action plan for them to be gone. For me, it’s almost to the point where I am obsessing a little too much about my student loan repayment plan. I am constantly trying to figure out my cash flow and budget to see if I can get there any more quickly. I’m really focused on my extra income efforts and it’s an obsession now.

Luckily, I was able to graduate and find a great job back in 2010 and it helped me pay back student loans a little bit and start my student loan repayment plan. So many people told me that I wouldn’t find a job though. They were probably just trying to help me out by telling me what most kids my age didn’t know back then, but I wasn’t listening.

Now that I am done with graduate school (which I am extremely happy about being done with), I really need to start focusing and finally starting to aggressively pay back my student loans and start my student loan repayment. I’ve been paying down my student loans a little bit here and there but not enough where you can actually notice it.

 

My goal with my student loan repayment plan.

My goal is to have my student loans completely gone by April of 2013, or even possibly March of 2013. I know any sooner is most likely not possible since my plan is already pretty strict. Learning how to pay student loans faster is not easy though. Yes, you can read about how to pay student loans faster, but you really need to sit down and make an action plan.

In order to complete my goal, I need to pay around $7,000 per month on my student loans for around 6 months (which would make the payoff date April of 2013). This most likely sounds insane, but I know it’s possible. No, I will not be living off of Ramen noodles. I will still have the same quality of life and be doing nearly everything the same.

My main thing is that we have really ramped up our income in the past couple of months. W is currently making more than three times what he used to make at his old job, and I’m making more as well. This extra money definitely helps make this goal more attainable.

So, as long as our income continues to remain the same, then my plan should work perfectly. And if we start to make anymore money, then hopefully I will be able to fully pay off my student loans in March, however, a one month difference will not kill me.

Here’s what I have done so far and what you should start with when learning how to pay student loans faster. Also, the below can also help you if you are wanting to learn how to pay for college without going into debt.

Related content: How Do Student Loans Work?

 

1. Add up your total student loan debt for your student loan repayment plan.

Your very first step with your student loan repayment is to add up your total student loan debt. Use a student loan calculator if you need to.

This may sound stupid, but have you ever truly added up your total student loan debt, down to the exact cent? Enter reality and figure out how much you actually owe. I have a couple of friends who still can’t really say how much they owe, because they aren’t sure. I can understand this because some of the loans that you’ve taken out might have been from 4 or more years ago.

When I added up my total student loan debt, I wasn’t completely sure of the exact dollar amount. YES I REALLY JUST SAID THAT, I’m a bad personal finance blogger. I did know of the general area, but I was off by around $2,000. When I finally sat down and realized the exact dollar amount that I owed, reality really set in.

Once you know that exact number, it’ll help you realize that you need an student loan repayment action plan to pay it off.

Also, using a student loan calculator can help if you want to figure out your monthly student loan payment. You can find several student loan calculators online with just a simple Google search.

Related tip: I highly recommend Credible for student loan refinancing. You can lower the interest rate on your student loans significantly by using Credible which may help you shave thousands off your student loan bill over time.

 

2. Decide which student loans you’ll pay off first.

It’s really up to you personally. Different people prefer to attack their debt in different ways. With me, I’m trying to get rid of my student loans which have the highest interest rates. A large amount of my loans are at 6.8%.

I prefer to pay the highest so that I am gaining the LEAST amount of interest on my loans that I possibly can. If I stared by knocking out a loan than gets 0% (which none of mine do, just hypothetically), then I would still be gaining interest on my other loans and that, in the end, would not be worth it to me at all.

However, some choose to pay off the loans that have the highest or lowest amounts. This way you can really feel like you are accomplishing something when you knock out loans one by one. If you knocked out the student loans with the lowest amounts first, then you will probably feel like you’re accomplishing more and be more motivated with each student loan that you eliminate.

 

3. Find extra money to apply towards your student loans.

I’ve really been working hard on finding ways to earn extra income for help paying student loans. I’ve been doing great with this, but it hasn’t always been this easy. In September I made $3,275 and in October I made $3,700 (both after fees but before taxes) in extra income. Before September, I wasn’t making nearly these amounts, and I am still very surprised.

EDIT (February 8, 2013): In the month of January, I made over $6,000 in extra income. I do many things in order to reach this level, read further on my extra income page. I’m a freelance writer, a virtual assistant (read further on how to become a virtual assistant and what exactly a virtual assistant does), and blog owner in my spare time.

For me, the main thing I do to make extra money is blogging and freelancing. If you are interested in starting a blog of your own, I have a tutorial that will show you how to easily make a blog of your own in just minutes. You can find the tutorial here.

My goal right now is to throw nearly all of my extra income towards my student loans so that I can pay off my student loans fast. Now, why am I not saying “ALL” instead of “nearly?” It’s because I am being realistic. I know for a fact that I will not put all of it towards student loans, in fact, I’ve already spent some of it (not a lot though).

Related articles:

 

4. If you can or want to, then ELIMINATE expenses!

There are probably a couple of things out there that you do not absolutely need. Or maybe there are things in your life that you can get for cheaper. Try calling any of the companies that you do business with and see if they can lower their prices at all. This can be your gym, cell phone, internet and so on. Getting a cheaper price can make student loan repayment attainable.

There are also many other things that you can do. Lowering your auto expenses, lowering your utility bills, eating at home more often, cooking from scratch and so on are all great things you can do to lower your expenses.

We are really working on eating at home as much as we can. We used to go out to eat way too much. What’s the point of eating out at a restaurant every single day? We were being stupid, it’s that plain and simple.

Cutting your expenses can help you pay off your student loans fast and reach your student loan repayment plan with a little less stress.

If you are still in college, I recommend you read my post How To Save Money On Textbooks + Campus Book Rentals Review. I have a coupon code in there as well, so if you are interested in saving money on your textbooks, it can be a great post to read.

What are you doing to pay off your student loans quicker?

 Answer these questions:

1. How much do you owe?

2. How much have you paid off?

3. How long do you think it will take you to pay your student loans off completely?

4. What are you doing to pay them off more quickly?

UPDATE: My student loans are gone (click here to read all about it)! 🙂

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About Michelle Schroeder-Gardner

Michelle is the founder of Making Sense of Cents, a blog about personal finance and traveling. She discusses how her business has evolved in her side income series. She paid off $40,000 in student loans by the age of 24 mainly due to her freelancing side hustles. Click here to learn more about starting a blog!

Comments

  1. Allison says

    Good for you. Sometimes I forget the you are sonyoung. You are so mature and responsible and highly intelligent.
    I didn't have any debt from undergrad, but came out with about 15k after grad school. We were making so little money at the time, but paid them off within a year.
    My recent post Friday confessions

    Reply

  3. Rachel says

    I owe about 60,000 and I've paid a monthly payment of about 600 for the past year. So I've probably paid off about 7,000ish of it so far? I've only been out of college for about a year and a half, so I dont make enough money to pay off them at a higher rate than I am now. I borrowed from two different companies- one I'm paying the max amount so those will be paid off in about 5 years, and the other I'm paying a lower amount because I make such low income- so that may take 10-20 years to pay off. Ugh. I give you credit for paying yours off in such a short period of time!
    My recent post My Favorite Thanksgiving Food- Green Bean Casserole

    Reply

  4. John S @ Frugal Rules says

    It looks like a good plan. I think it's great to throw your side income at the loans. Without it I am sure it would take you quite a bit longer to pay them off. Thankfully we paid my last student loans off in January, it was a great feeling to be finally free of them.

    Reply

  6. Emily @ evolvingPF says

    Congrats on your new commitment to paying off your loans! I'm so excited to see you ATTACK them!

    I currently owe $16k in student loans. They are subsidized and in deferment.

    I have paid off about $1k. (I had one small unsubsidized loan.)

    We could pay the loans today if we wanted to – we have the money set aside – but since they are in deferment we have part of the money invested to try to get a bit of a return before I graduate and my deferment period ends. So far that's going well. So the plan is to pay the loans the day I stop being a student, which will probably be in May 2014.
    My recent post Boomerang Kids, Listen Up: It’s Not All about You

    Reply

  7. @Lbeemoneytree says

    At first I balked at how quickly you want to pay them off-March 2013 is around the corner, but you've been doing so great with your side hustles I think this is easily attainable. I have 2300.00 left on my student loan and I SHOULD pay it off, but it's so small I often forget and put the money towards more "pressing" goals or situations. You can do it!

    Reply

  8. Lance @ Money Life and More says

    My girlfriend owes around 60 to 62 thousand. We have the exact number at home. When she graduated 1.5 years ago she had around 80k so she is making good progress.

    We hope to pay them off by early 2014, maybe in the March to April time frame. I am saving money to put a big chunk down once we get married.

    Reply

  9. DC@Young Adult Money says

    I actually am opposed to the idea of paying off student loans faster than required, depending on the interest rate. Based on the Fed's actions over the past 5+ years (and even more so recently!) I believe we'll see inflation slowly rise over the next decade +, making it profitable to NOT pay down those loans (since they will be under the inflation rate). Everyone has an opinion on this, and almost no one factors in inflation rate so I don't blame you or anyone else for wanting to get rid of them, I just approach it differently.
    My recent post Why Credit Cards are Good

    Reply

  10. graduateliving says

    Holy Moly, $7,000! That's incredible! Good luck – even just getting one loan gone feels great.

    1) $18,000 and some change in interest (maybe like $30?)
    2) About $14,000.
    3) I should be done with my interest-bearing loan about the time I graduate; the remaining $8,500 will depend on my employment after that.
    4) I'm living SUPER-CHEAP and I picked up a side-hustle to throw extra money toward them. After December, I'll have an extra $150 from my budget (cancelled gym membership and a now-solidly funded emergency fund) to throw toward them as well.
    My recent post Paycheck, Paycheck, Paycheck

    Reply

  11. SavvyFinancialLatina says

    It doesn't surprise me that you have 40K in student loans. Grad school is expensive!
    I'm glad you are aggressively clearing off those loans. I know once they are gone you will have a weight lifted off your shoulders.
    We only have a car loan (around $3500 right now, down from $5300 in July). I'm paying $400 a month to clear it off. So close! August 2013 is the latest this loan will be paid off. We might pay it off sooner 🙂

    Reply

  13. C The Writer says

    Honestly, nothing. With no job and no income, my loans just keep growing. : (

    Luckily they're all federal, and under IBR, but it doesn't help much. I still owe it. And just for one undergrad degree from a not that great school.

    1. How much do you owe? $45,000

    2. How much have you paid off? $0

    3. How long do you think it will take you to pay your student loans off completely? Depending on what happens, it coudl take five years, or it could take 20. The future looks so uncertain right now with no job and no money and nothing, it seems, to help with this.

    4. What are you doing to pay them off more quickly? Nothing. I don't have any money. : (

    Okay, that was totally depressing. Offering another perspective, I guess.

    Reply

  14. Kate says

    I graduated in May 2010 with $23,906 in student loans. (I obviously added them all up to come up with that number, and now I don't think I'll ever forget it!) I started paying them after the 6 month grace period ended in November 2010, and I had them completely paid off in September 2012. While that's not nearly as aggressive as what you're planning on doing, I think it was pretty good. I just couldn't imagine paying the minimum for TEN years and watching all that interest add up. I basically did everything you've outlined, and it worked perfectly, and I was probably also a little obsessive about my plan. Good luck to you!

    Reply

  15. Brian says

    I owe about 10K from grad school with no plan to pay them off early. They are at 2.3% so I don't see the point in paying them off early. I would rather have the the cash flow available. I did pay off my loans at 6.8% really quick though, but now I am just taking my sweet time.

    Reply

  16. CrazyTragicAlmostMagic says

    I owe around $22,000 and I only know this because there's a site that keeps a tally of all my loans. The number really weighs on me as I won't be finished with my undergrad until Spring 2014. My guess is that by the time I'm done I'll be in the mid 30's. My most irritating loan is at 9% and as much as I'd like to tackle it, I can't. My current job simply doesn't pay enough for me to be able to make early payments.

    Reply

    • MakingSenseofCents says

      I wouldn't feel too bad. 9% is high. I'm sure once you graduate that you will be able to start paying it. Just make sure you start applying for career positions at least a couple of months before you graduate.

      Reply

  17. @danilee_13 says

    One of my student loans ($20,000) just went into repayment this month, while I'm still a student for 6 more months. Apparently, there is no more deferment, but I also did not realize that it was private, and not federal like all of my other loans. How I didn't know that is beyond me, because I track everything I do and have like a crazy person. Unfortunately, I am still in school, and don't have a job, so all of our income, less than $30,000 a year is going towards our house and car payments right now, as well as standard living costs. Other than our cell phones, we have already gotten rid of everything not necessary. I've been trying to bring some side income in, but getting started is hard. Any more tips to share? I've already picked up the mystery shopping, and love it.

    Reply

  18. chloe Jacqueline says

    You go girl!! I plan to be in your shoes in about two years. I just finished my BA and am now working on an MA, and as soon as I am done those loans are being kicked in the butt! This is a great plan! Bookmarking this post for later for sure! I can't wait to see your post in April (or better yet March) that says you have all your loans paid off!! Love seeing people get debt free! =)

    Reply

  19. LenaAtOnMySide says

    It sounds like a great plan. Good luck! You were truly lucky to secure a great job after college. And with your side income, I know you can do it!

    Reply

  20. Stephanie says

    I'm still working on mine! Right now, with my finances and the tax bracket I'm in, the student loans are a great tax shelter for me, so it's only been the minimum payments (plus about $100 extra a month) since I started paying in 2011. Since one is through Chase and another through a private company, I really need to sit down and add up what I still owe. Thanks for the push!
    My recent post Happy Birthday To Me!!

    Reply

  21. RichUncle EL says

    I have about 35K left student loans and I want to pay it off within 2 years. Thats being a bit optimistic but we will see. THat is the only debt I have left and I have paid about 5k on it this year. IT was for my graduate education as well. Good luck with that massive monthly payment.
    My recent post What Personalities make up a PF Blogger

    Reply

  22. wmwo says

    What an increadibly ambitious goal! Good for you! That will be absolutely amazing when (not if) you accomplish it. I graduated 4 years ago, and I'm no longer carrying any student debt. I paid off close to $20k in 13 months after finishing university.
    My recent post Crossroads

    Reply

  26. Happy_Homeowner says

    Yeah! Love this. I just paid off the bulk of my loans over the summer (comment yesterday about sending Sallie $16K). The remainder is just over 13K but it's at 1.265% so I plan to pay only $100 over the minimum each month…probably until I get bored and just decide to send in a check again…my money works better for me in other avenues given the little bit of interest I'm paying!

    Reply

  27. Jessica says

    I currently owe $18,704, but started with about $25,000 as of April 2012. My goal is to have it paid off by December 2013. I am moving back home, and hopefully will be debt free while I stay with my dad, so hopefully, with a good income, $1500 a month, wont be much!

    Reply

  31. LivingDFRocks! says

    I think it's more than doable and I'm rooting for you! I've been throwing on average nearly $4K/month to debt since this August. My debt balance in August 2012 was over $16K (highest balance was $55K back in July 2009) and I set a goal to be debt free by Dec 31 2012. I'm am actually ahead of my target date and should have it paid in full by Dec 20th if not sooner!

    I can't wait to read your progress reports 🙂
    My recent post Financial Literacy Month – My Two Cents

    Reply

  32. Alexa says

    I think you have a fantastic plan! I love how driven you are to pay the loans off so quickly. Best of luck to you! Maybe your online income will keep climbing and you'll be able to pay them off even sooner 🙂
    My recent post Back to Budgeting!

    Reply

  33. MakingSenseofCents says

    I agree, $7K is a ton when I actually think about it. However, I should have said in my post that we will be taking some of our emergency fund cash and will be applying that towards the loans as well. That plus my work bonus and tax returns, all will provide a lot of money towards my student loans.

    Reply

  38. mycanuckbuck says

    I am lucky – didn't graduate with any. Tuition was much lower 15 years ago, and I did a co-op work program which helped pay as I went through school.
    My recent post An introduction into the world of freegans

    Reply

  39. Jason Clayton says

    This is right about the same amount that my wife and I had after my MBA and my wife's masters. We paid about 30k of it off and still have about 10k to go. Slowly but surely this will be gone in a few years.
    My recent post Conscience Spending: How to Buy Whatever You Want Without Guilt

    Reply

  41. My Money Design says

    I don't know which one I'm more freaked out by – the $38K you still have to pay off or the $7K you plan to payoff per month. As impressive as this is, just make sure you don't cut yourself to short! But I don't blame you. At 6.8%, I'd also tackle this one first.

    Reply

  43. MoneySmartGuides says

    So excited to read this!! I am a huge advocate of paying off your student loans early. So many tell you not to because it is "good debt" and that it's a tax write off. While you can make arguments for both cases, I feel that getting rid of the debt opens up many doors for you. For instance: without a debt payment, it makes it easier for you to travel for 6 months because you won't have to deal with making payments. Also, if you want to buy a house, student loan debt will count against you in terms of what you can afford.
    My recent post Two Ways To Save Money This Holiday Season

    Reply

  45. theoutliermodel says

    Awesome! I wish I had the cash flow to put 7k towards my student loans each month! I am settling for a monthly payment of $500 plus "nearly all" of my extra income. I think I should be able to pay it off in 2-3 years.

    Reply

  47. abby says

    I actually make my last student loan payment tomorrow which is $1,200. I owed $25,000 on a credit line and about $8,000 from the government. I can honestly say I don't think my education was worth the stress and setbacks it caused and I ended up in a soul sucking job (but thankful to have a job these days). My boyfriend actually took a year off after high school and worked with his father on fishing boats. Then went and completed a two year IT diploma for free (some sort of government grant). Completed a couple of certifications that he studied on his own which might have cost a few hundred dollars and is now making almost triple what I make. He never had to deal with student loans, I on the other hand have had student loans for about 10 years now. Wish I would have taken a different route! Oops, guess that ended up being sort of a rant! If your still with me just wanted to say best of luck and I hope you make your goal of April 2013. It is a very sweet feeling to make that last payment. Cheers

    Reply

  48. Mark in Houston says

    1) Owe $ 53,000 today

    2) Paid $ 7,000 so far, very slowly over 10 years from $ 60k which had $ 20k in deferment interest, original loans $ 40k.

    3) My goal is to pay off in 15 months with crzzzy $3,600/month payments. Otherwise, I will pay until I am almost retired.

    4) How? First let me say, my "lifestyle inflation" that i consciously decided to allow my self live through for 15+ years attributed to that mountain. Today, I have most credit cards paid off, am selling my pre-owned hybrid car with $450 payment in order to pay only $99-$150 on an economy car lease. I have averted back to my college days "conscious poverty", giving up social drinking, incessant restaurant visits, cable TV. Goal: Getting that monkey off my back in 2014! Booyah

    Reply

  49. I Love Being Online says

    Well currently I have an associates degree and I'm working on my bachelors degree in business administration. When I am finished with school I will have to pay around $55,000 worth of school loan debt off. I have no plan to pay it back yet since my web and graphic design company isn't lucrative, just yet. I pray around the time that I have to start paying them off in 2014 – my company will have grown tremendously!
    My recent post Life is Too Short

    Reply

  50. HardatWork says

    I had about $39,000 in loans after my undergrad and master's degree. I now owe $197.00 after about 3 years and 4 months of payments of $1,092/mth. I made quadruple payments every month. I sent EVERY tax return to the student loan company. Every raise that I got at work was applied as extra money toward my debt. I even sold items online for a little extra cash. I am happy to say that this loan will be completely paid off on Friday of this week. It's going to be one of the happiest days of my life. $39,000 dollars is a large amount of debt and it feels cumbersome esp. early on in the loan.

    Reply

  52. Iain says

    I am faced with a very similar situation. I have an equal amount of deb and it slowly goes down. Unfortunately, I haven't secured as much extra income as you, but that is the way it goes.

    I love how aggressive your plan is. I am working towards attacking my debt as it is a constant reminder that I owe money, and I hate that.

    That's life. Until next time.

    Reply

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  55. Government Loan Pro says

    It’s a good idea to work at the loans with a higher interest rate first. That way you get rid of the ones that will cost you the most in the long run. Good luck on getting that payed off.

    Reply

  56. Mariana Ortan says

    I graduated with roughly $60k in private student loan debt. I’ve been searching around seeing how I can get some help on them, the payments are more than I can afford. Found this page searching google and just wanted say glad your plan of attack worked for you. I guess I need to find my own now.. I think my problem was that I just did research enough PRIOR to taking out the loans, and thats why I am stuck. Wish I had federal loans so I could qualify for IBR, which isnt available on my private loans. Ive found a few pages that would have helped me, and maybe will help some of your readers.

    http://www.studentdebtrelief.us/knowledge-base/how-to-avoid-student-debt/

    Wish everyone the best with figuring out their student loans

    Reply

  57. tarrence says

    The sad thing is that I was thinking that $40k debt was not bad because many students have to pay much more but now that I think about it 40k is a lot of money.

    Reply

  58. MichaelBrothers says

    Great article. Thank you for taking the time to share your insights and experience with us. I enjoyed reading your tips and advice.

    Thank you

    Reply

  59. Michelle says

    Please give me info about extra income from home. I’m finishing my second master’s in May and have 3 small children. I have more loans than you started with and I’m already stressing. I can’t pay extra daycare to work more because it doesn’t pay to do. Please help !

    Reply

  60. Danielle says

    While I appreciate your honest input, who has $7000 to pay for their student loans monthly, much less live off of? Your information is helpful but discouraging to those who have graduated with both a bachelors and master degree and cannot afford to make those outrageous payments and live and buy a house like you’ve done. What is your real life experience for people like me?

    Reply

    • Michelle S. says

      I understand what you are saying. I have both my bachelor and master degrees but thankfully did not generate too much debt from both combined.

      Not everyone has $7K, but most of the things in this post can still be applied to the average person with student loan debt. Whereas you might not be able to earn side income at this level, just a fraction can still be put towards student loans and help you pay off your student loans quickly. It will take more time most likely to pay off debt, but it is still possible!

      Reply

  61. Sage @ The Dream Team says

    Man, this was awesome to read and it comes at a time when I too have recently decided to work on doubling down on my initiative to pay down my own debts, especially those related to school. A lot like you, I began doing it all very slowly but finally over the course of the past week I decided that enough was enough and it was about time I started taking it more seriously to pay this all down faster and I’m really glad I have because just recognizing that I have to on its own, automatically lifted a great deal of weight from my shoulders. Congrats on coming to the realization that it was time to buckle down and thanks for the solid ideas on how to make it happen more smoothly!

    Reply

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