Here is a post by my staff writer Jordann. She submitted this post before I announced that my student loans are gone, so hopefully that will clear up any confusion below 🙂
Student loan debt is something pretty much everyone reading this blog can relate to. Most people who go to University will graduate with some form of debt, whether it’s federal loans (like mine), bank loans, or a personal loan.
This makes for a sort of bitter-sweet graduation day, where you’re excited to take on new opportunities and possibilities, but nervous about finally having to start paying all of those loans back.
The period after graduation from school, that used to be filled with starting new jobs, buying homes and getting married, is now what I like to refer to as the “Paying back student debt gap years”.
There’s typically no home buying, and no family starting. How can there be? When student loan debt is weighing you down? Most people don’t try and pay their loans off particularly quickly, instead they focus on making the minimum payments and figuring out their life. Not everyone though. Some people take those gap years and run with them.
Michelle is about to pay off her student loans once and for all, go Michelle! She finished up her MBA with a fairly significant student loan debt and has done an admirable job at attacking it.
I’m in the same boat. I graduated from university with the average amount of student loans, $26,720. I was nervous about paying them back, but once I got into a good groove, I managed to get rid of them in 17 months. Since we’re both student debt free now, I’d like to go through some of the great perks of not having student loan debt.
More Freedom
This one is fairly obvious, less debt means more options for your money right? Absolutely! Not having a monthly payment to worry about means I can spend that extra money on things like retirement savings, traveling, or plain old lifestyle inflation.
I can also take more career risks, because I’m not constrained by my monthly debt payments. Naturally, I’m doing something completely boring with it: I’m paying off my car loan.
More Access to Credit
Ok, relax, let me speak. I don’t mean “My student loan debt is gone, I’m going to get a nice shiny new line of credit and max that sucker out!” Duh. I mean that when the time comes for me to buy a house, I’m not going to have an outstanding student loan counting against me.
Many people I know have bought homes while still carrying sizable student loans. This definitely affected how much they were qualified to borrow, and subsequently, what type of house they bought.
More Peace
On a less tangible note, getting rid of a debt once and for all means, at least for me, that there’s less on my mind.
I can go to the park with my dog without having my mind wander to my student loans. I don’t have to worry so much for my job security, because I have fewer demands on my money.
I don’t have to push so hard to earn extra income, because one of my major goals for that income has already been achieved. I find myself day dreaming about my career, and being excited for the possibilities, not anxiously worrying about how I’m ever going to make enough money to pay off my debts.
Student loans were a huge pain in the butt. I hated them with a passion and wanted to see them gone. It was a really tough 17 months, but I did it. Is it as awesome as I thought it was going to be? Well, there was no parade, no slow clap, no medal at the end of the finish line. But, when I’m driving home at the end of the day, feeling lighter than I have in years, that makes it all worth it.
Do you have student loans? Are you trying to pay them off quickly?
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Jimmy says
student loans are a massive bugbear. A friend just finished paying his back and he’s 32.
Michelle says
I’m glad mine are gone 🙂
Thomas | Your Daily Finance says
Congrats on having taken care of those student loans. Wow to think you got rid of them in 17 months. That is a lot of effort on your part. I can’t wait to be able to come on and not have to think about the money I owe for student loans. Currently the wifey and I are still paying on ours. We need to pick up the pace and knock those things out soon. That extra money would be very helpful.
Michelle says
When do you think yours will be gone Thomas?
Kasey @ Debt Perception says
I have student loans up the wazoo. I’m trying to pay them off quickly but paying interest on interest makes for slow progress.
Michelle says
I’m sorry Kasey 🙁
DC @ Young Adult Money says
I do have student loans, but I am not trying to pay them off quickly. This might change, but right now I want to build up my emergency fund. I am working on side hustles quite a bit to try to increase my overall income, with the ultimate goal of it paying for my mortgage and student loans each month. Not having debt and/or having a higher income to offset it can definitely give you more freedom! Congrats on paying yours off!
Michelle says
Sounds like you have a great plan DC!
[email protected] says
We paid the last of Greg’s loans off last year! It was a relief because it felt like we had been paying on them forever!
Michelle says
WOOOHOOO Holly!
Alexandra @Real Simple Finances says
This is really motivation, Jordann! If I have double the student loan debt as you, then technically I should have it done in 34 months, right? 😉 That’s a nice goal, and it really helps me feel as though this journey is manageable. I hate seeing my balance creep up every month due to interest, and my husband and I are making an aggressive plan to pay these suckers off as quickly as possible.
Michelle says
What’s your payoff date? Good luck 🙂
Alexandra @ Real Simple Finances says
Thanks! I actually don’t have a payoff date. I’m rearranging some other finances to make more room for extra payments. 🙂 After that I will get my payoff date goal and post it everywhere!
Amanda @ the giraffe life says
I had 20k in loans and paid them off in about 2 years. 🙂 I figured out how much the interest would cost me and used that as motivation to pay back my loans early. I’m not paying back my car loan early (the interest rate is 0%) so we’re using that money toward the mortgage now.
Michelle says
Great job!
Michael @ The Student Loan Sherpa says
I have a ton of loans from law school, so it will take me a long time to pay them off. I do look forward to the days of freedom from my student loans.
Michelle says
When’s your estimated payoff date?
John S @ Frugal Rules says
We finally paid mine off last January. It felt like forever and it was pretty close to that. 😉
Michelle says
WOOHOO John!
Andy | Income By Example says
I have a boat load of debt and am increasing my side hustles to get it paid off fast. I’m keeping track of it on my blog and its definitely inspiring and makes me feel like I’m finally taking hold of my finances. One day I will feel this freedom too, can’t wait…
Michelle says
I can’t wait also Andy 🙂
Pauline says
I was luck to graduate debt free but I am sure I would have made my best to pay off the loans early. Having that sum looming over your head in your most productive years can really prevent you from moving forward. Better have it out of the way.
Michelle says
I agree. I was so stressed out about them all the time!
Matt Becker says
I think the peace of mind aspect is a huge one. As is the flexibility. I was extremely fortunate to never have student loans, but I can certainly imagine it would have been frustrating to have to dedicate a large chunk of my income to them. Though hopefully I also had more income to dedicate because of them, so it’s a bit of a mixed bag.
Michelle says
The peace of mind is wonderful!
Brian @ Luke1428 says
“I can also take more career risks, because I’m not constrained by my monthly debt payments.” This is a great point that I think many people overlook. Debt prohibits us from taking more risk or pursuing a dream job. Instead we are forced to plod along in a vocations we only half enjoy because we rely on the weekly paychecks so much to pay off debt.
Alexa says
I don’t have or haven’t ever had any student loans but I can only imagine the burden they bring. Congratulations to both of you for all of your hard work in getting rid of them!
Kate says
Your posts have inspired me to look outside my standing income and look for that “side hustle” to pay off our cars and student loans. I am going to pay off my car by the end of year if it kills me and then I am going to tackle those student loans. They do loom over your head!
Michelle says
This makes me happy to hear Kate. Can’t wait until your loans are gone!
SuburbanFinance says
If possible, everyone should pay off their student loans early! It’s definitely something I would do if I had federal loans.
Done by Forty says
We paid off my student loan right before purchasing our home, and it was a great feeling (though I certainly let them hang around too long.) Congratulations, Jordann! The feeling of being debt free is fantastic, but unfortunately doesn’t show up in P&L statements. It’s real, but hard to measure.
SavvyFinancialLatina says
We didn’t have any student loans from school. I’m very glad we didn’t because I know how much people pay in student loans a month, and it’s a scary number! A lot of students don’t think how much student loans will be in the future. The monthly payment seems so far away. But when you consider the amount of bills you end up being responsible for after graduation, the sum is not a small one. Highly encourage students to figure out a way to not get student loans. Some students are lucky, like my hubby, who got parental support for tuition. He worked to pay for living expenses. I received a lot of merit scholarships, and my parents provided a $300-$400 stipend for the first 3 years. If you can get a job on campus (they are relatively easy), get scholarships, and not have unnecessary expenses, you can graduate debt free.
Nick @ ayoungpro.com says
Getting rid of student loans (and debt in general) early allows you to harness your greatest wealth building asset, your income, and put it to use to build wealth. The easiest way to build wealth is to invest consistently over a long period of time. 🙂
Peter says
Congratulations Jordann. It must some feeling to pay off your loan. I just paid off our two cars, it’s such a great feeling. My student loan is next.
Sean @ One Smart Dollar says
I was lucky and I didn’t have student loans, but if I did they would have been a high priority.
Canadian Budget Binder says
Student loan debt is a big burden for those coming out of school to carry on their shoulders. No matter how much the debt is, debt is debt and any student should want to get rid of it as soon as possible Congrats again on paying your debt off. I paid cash for my educations both times along with monetary awards I won but I know that not everyone is fortunate. Great tips.
Victor Björklund says
I’m not sure how it is in United States but in Sweden the interest on student loans is like 0.5% which means that is much lower than any other form of credit so if one should pay of debt it would be smarter to pay of debt on houses and the car before. =)
Michelle says
I wish interest rates on student loans were that low here! Mine were mostly at 6.8%.
Lisa E. @ Lisa Vs. The Loans says
I can’t wait to experience these benefits when my student loans disappear!
Cat says
Nope, but I definitely agree with paying them off early!
Newlyweds ona Budget says
I paid off a big chunk last month, leaving me with about $6,000 left in loans, all 0% interest. Most likely will pay them off by the end of the year and then we’ll be done!
Michelle says
I’m jealous of your 0%!
Lauren says
Great post! I’ve pretty much given up paying attention to my student loans. Mine is $50,000 and the interest is so ridiculous that I’m paying the bare minimum (which is nothing at the moment, given how little I need to earn while living in Vietnam) until they get written off 🙂
CeCe @Pink Sunshine says
I paid the minimum and did it in 10 years. I just didn’t have the means to do it any quicker. It was only 16k. I can’t believe I’m saying ONLY because it’s crazy that people have triple that now as the average. Debt period is oppressive. It makes it so much harder to pay yourself first and make strides in savings and home buying.
Krista says
I’m all about paying back those student loans. I also agree that a major reason is it just FEELS better. I’ve been told by many people that because the interest rates on those loans is less than 7% it’s not worth paying them back yet and instead I should invest – but what if I lose my job or my husband loses his? We can always lessen the amount we invest (and I’m all for investing a little each month even when you’re paying off debt) but I can’t just back out of my student loans without major repercussions. Nice work on paying them off!
KK @ Student Debt Survivor says
No student loans, thank goodness. So glad to have them out of my life!
Madame says
I took out student loans to attend school too and actually the first year of university, I ended up dropping out. One of the reasons was because of my fear of having to pay back this money after I finished school. It really stressed me out. I barely had anything saved to my own name, and all I could think about was me not being able to pay off the loan.
It may have been a good thing that I took a pause from school at that point, as I ended up building a nice cushion and then went back to school in a completely different major. I graduated and paid off my entire student loan once the grace period (for charging interest) was over.
GamingYourFinances says
Peace of mind is huge! We’re 311 days away from paying off our mortgage and we can already feel the freedom!
JP @ cashsnail says
I had 20K€ of student loan after graduating. It took me nearly 3 years to pay them off… I could have done it faster, but I was traveling a lot & enjoying life in parallel.
The best part of paying off the loan is that you grant yourself a big “salary raise” 🙂
Brian says
I was fortunate in that my undergrad was paid for, however, I am thinking very much about getting an MBA. The problem here is the expense if I want to go to a top tier school. The online options are reasonably priced, although putting that on my resume is a concern. Still thinking!
Arianwen says
This is food for thought! I haven’t ever tried to pay mine off, even though I have savings. I guess those savings give me more peace of mind than having no debt!
Timothy Hogg says
If you have student loans in the 3.65% range– isn’t that technically good debt and you should focus on paying down other debts that have a higher percentage to them? I don’t see what the advantage is– that being said I have 40k of student loans and I am 40 now— its going down slowly, but not slow enough– but I feel as if I put that money to that debt, I am actually losing money when everything yields more than that. Am I missing something?
Shorething says
That is all she had? That is nothing! Try having 130k in student loans. I could pay off 27k in 17 months too its not hard and I have done it. But since Obama took office, I am stuck paying interest on interest and their aint a damn thing I can do about it. Every time I get some progress in getting answers they sell off my loans and I have to start all over. Im so sick of hearing about these kids with ONLY 27k in student loan debt and crying like it is the end of the world. Having over 100k in student loans and making double payments and seeing little progress since most of it gets eaten up my interest is something to worry about. 27k in loans is something to laugh at since it is easy to pay off and there is a light at the end of the tunnel.
Heather says
I may one of the few people that planned ahead for college when I was in high school. We didn’t have much money so I realized I’d have to pay every penny that financial aid didn’t pick up. $20k a year in university tuition is way over the top for $5k I could receive in the same year for the same credits at a community college. I think I’m going to pay the rest of my student loans off this week. I’ve been saving around $15k-$20k a year by not spending over the top or buying $100 jeans and $4 coffee everyday. I’m glad I read this article!