“How I Paid Off All My Student Loans in Just 2 Years”

how i paid off all my student loans

This is a guest post from Eric Rosenberg at Narrow Bridge Finance who is also a fellow Denver blogger that I got to meet last year at FinCon and at various local meet-ups before the conference. He’s a good guy, and I’m happy to share his getting out of debt success story with you!

In March last year, I proudly announced that I had paid off my student loans and requested a celebratory flyover by the Blue Angels. While the Blue Angels never came, it has been wonderful to spend nearly a year without paying a cent of student loan interest. Here is how I did it.

How I Paid Off My Student Loans in Two Years…

How I Got Into Student Debt in the First Place

Undergrad

When I was seven years old, I joined the local Cub Scout pack. After pinewood derby races, campouts, and popcorn sales, I graduated my way into the Boy Scouts. I stuck with Scouting through middle school and high school. One of my favorite parts of Scouting was going to camp for a week each summer. I loved it so much, that when I was 15 I joined up and got my first job at a Counselor in Training (CIT) at Peaceful Valley Scout Ranch just south of Denver.

While my friends made fun of me for still being in Scouts when I was that age, it was easy to brush it off. I had great friends and wonderful experiences through Scouting. When I was 15 and started working at camp, college tuition was the farther thing from my mind.

It turns out, the Denver Area Council of the Boy Scouts has a large scholarship fund for camp management who meet certain community service and GPA requirements. I qualified and stuck with it through college. I was happy to have had the John Madden Leadership Scholarship, with a match from the University of Colorado Foundation and Wells Fargo banks, pay 100% of my undergraduate college costs.

When I graduated, those same friends that made fun of me for being a Boy Scout started paying their student loans. Who’s laughing now!

Grad School

My family had put away some money for me for college, and I was fortunate to only need about $1,000 of it the entire time I was at CU. I worked hard while I was there and left with a finance degree that got me a good paying job fairly quickly after graduating.

About a year after leaving CU, I began to think about the next step in my education. I applied for grad school at a few schools, and decided that the best fit for me was the University of Denver. The biggest issue with that, however, was the cost. The total estimated cost of attendance was about $90,000.

I Worked Really, Really Hard

To get the best MBA experience, I knew I had to enroll full-time. But I didn’t want to leave my full-time job that was paying for me to live. I made the stupid obvious choice. I went to school full-time while working full-time.

For the next two years, I didn’t have a lot of down time. At the peak, I was taking 16 graduate credit hours while simultaneously working a full-time finance job. I was fortunate to have a supportive boss that allowed me to leave a little early two days a week to make it to class.

But my evenings often kept me at school past 10:00pm, my weekends were focused on studying and homework, and my days were spent at the office downtown. If you say you don’t have time to work even part-time while going to school, I can only snicker at your ignorance or laziness. (Unless you are in Law school where you are not allowed to have a job, or Med school where you would likely die of exhaustion if you tried to work at the same time.)

Keeping a $40,000+ income while going to school was incredibly important to my payoff strategy. I was taking the maximum federal student loans offered to me and still had to pay about $7,000 a quarter on top of that. Combining work income and my unused college savings for undergrad kept me above water while in school.

I Kept Expenses Low

Just because I had a good job didn’t mean I lived like I did. I found an old, rundown house near school with a roommate that cost me $400 per month plus my share of utilities. I usually packed a lunch and ate meals at home to keep costs low and save time.

I took the light rail to work thanks to a free pass with my tuition. I minimized driving to save on gas and maintenance costs.

In my little spare time, my entertainment was almost 100% from Netflix at about $10 per month, less than the cost of a movie.

I really lived like a college student to save money.

I Focused, Paid Extra, and Paid Often

Unlike a mortgage, student loans can be paid any time. I left school with four student loans with different balances. Two of the loans were subsidized (no interest) until 6 months after graduation. 2 of the loans accrued interest while in school. The rate on the loans, totaling about $60,000, was 6.4%.

I used a debt snowball to strategically pay off the loans. I went after the low balance loans first, as it would do the most to lower my minimum payment in case something unexpected happened. In general, I suggest people pay their highest interest debt first. I was only able to pick and choose because the interest rate was the same and I didn’t have any other debt (I had paid off my car during school).

I kept my expenses low after graduating, and was able to work out paying $700 per month into my student loans. I paid half of that, $350, each payday. I would pay the minimum each month on the larger loans and everything extra into the smallest one until it was gone. I kept that system going until I only had one loan to go.

I Was Relentless

While paying off my loans, I was very single-minded. I chose to keep myself on a strict budget so I could keep making aggressive overpayments each payday. At the same time, I was saving a modest emergency fund that rose to about $5,000.

One pay day, I realized I had enough in the bank to pay the entire remaining balance, $3,690.52. I went against my emergency fund rule and took some money out so I could pay off the debt once and for all. I figured that saving an extra $700 per month would help me build up my emergency fund quickly. (It did.)

Where I’m at Now

I was never really debt free. I didn’t use all of that college money for tuition, as I was working full-time and able to pay it quickly as I was in school and after I graduated. I ended up paying off my student loans exactly 2 years and 6 days after graduating.

That college money went toward a down payment for a condo. I just refinanced and have a balance just below $100,000. After paying for a $90,000 education in less than four years, I know I can handle that without any problem.

My interest rate is only 2.875% and I don’t have any other debt. I am not super worried about paying off the mortgage as fast, as I can probably beat 3% with smart investments. Either way, I know that I have the ability to be debt free in the foreseeable future.

You Can Do It!

Debt can feel overwhelming. It can be stressful. I can be crushing. But if I can do it, you can do it. I am not special, I just knew focused, saved where I could, worked really hard, and made paying off my debt a priority. You can do it too.

 

What is your debt story? Do you need a little extra motivation or guidance? Share your thoughts in the comments.

Eric Rosenberg writes about personal finance at Narrow Bridge Finance, a site dedicated to saving you time, money, and headache when dealing with your money.

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25 comments


25 thoughts on ““How I Paid Off All My Student Loans in Just 2 Years”

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  1. CLV

    Great story – congrats on your achievement! I’m down to $9800 in student loan debt from $75K at graduation, so this was a good inspirational nudge to keep working at it until it’s finally all gone.

    Reply
      1. CLV

        It wasn’t quick – it’s taken me 12 years to get where I am. That’s why I find your story so inspiring. Only 2 years!

        Reply
    1. Eric

      It certainly wasn’t easy, but it is totally possible for anyone with a good degree and a good job. I did it by living cheap and focusing a huge portion of my income on the goal.

      Reply
  2. Johanna

    I’m paying off my debts too, just curious if you were putting anything away in savings (besides emergency fund)?

    Reply
    1. Eric

      I was not saving much while paying down the debt compared to after, but I was saving.

      Other than the emergency fund, all of my savings were in my retirement accounts. I was taking 100% advantage of my employer 401(k) match plus put a bit extra into my Roth to get in the habit.

      Was also paying off a car loan during part of that time, which I paid off in full as a birthday present to myself about 2.5 years into the 5 year loan.

      Reply
  3. Shannon

    This is a great story!! I am curious about the saving portion a well. I am going to be out of debt by the end of the year, but I have stopped contributing to my IRA to make this happen. Sometime I wonder if that is the right choice…

    Reply
    1. Eric

      I took 100% advantage of my employer 401(k) match and put a little something into my Roth to stay in the habit of saving while paying down the loans.

      Reply
  4. c

    “If you say you don’t have time to work even part-time while going to school, I can only snicker at your ignorance or laziness”. That seems very judgemental to me. What about people with family responsilities (i.e children, sick parents/siblings)? Or people with physical or learning disabilities that them to take longer and need more time to work on assignments? Are they lazy?

    Anyway, good for you that you were able to get loan free quickly. There are certainly some lessons to be learned from the rest of your article.

    Reply
      1. c

        Sure but that doesn’t make people “Ignorant” or “lazy” if they can’t figure it out, or if it doesn’t become “truly a priority” for them. Not trying to pick a fight with you but as someone who has been in such a situation, I dislike very much being told that sort of thing. You don’t need to use such harsh and negative language.

        I made my choices then and they worked for me, I’m now working hard and feeling very confident with what I’m doing to pay off my debts. There’s a lot of different paths people can take to be debt free.

        Reply
  5. Kevin Watts

    Fantastic story. It seems like you were on the right path from the beginning. You had plan of action and you stuck to it. I am about to finish paying my student loans this month and I am very excited. I did it with out much savings, I know this was a rookie mistake but I had a vengeance against debt.

    Reply
  6. Pingback: March Month End Round Up

  7. Stephanie

    Admittedly, I am bad at math. But I am confused as to how you would have paid back $60,000 in two years paying $700 per month. Was that $700 on top of the principle?

    Reply
    1. Eric

      I simplified the actual story a bit here. In addition to the $700, I made a handful of large lump payments whenever possible. Those were primarily sourced by my bonus at work and my tax refund in addition to occasional dips into my savings.

      Every extra dollar I had went to paying off my student loans.

      Reply
  8. Emily

    One pay day, I realized I had enough in the bank to pay the entire remaining balance, $3,690.52. I went against my emergency fund rule and took some money out so I could pay off the debt once and for all. I figured that saving an extra $700 per month would help me build up my emergency fund quickly. (It did.)

    This really struck a chord with me. After reading this, I realized that I had $5000 in savings and $2600 in loans with a particular lender. It was scary, but I decided to pay it off the balance once and for all. I still have $9600 to pay off with another lender, but paying off the $2600 and seeing that my account is paid in full rocks my world. Thanks for sharing your story to inspire others!

    Reply
    1. Eric

      I did the same thing when I finished paying off my car loan and my student loan. It was so close and within reach, so I just took a chunk of savings and paid them off in full.

      The savings have come back ten fold since then.

      Reply
  9. Cynthia

    This is very inspiring, although keep in mind that it it not feasible for all students to work during their studies due to learning disabilities, let alone work a full time job. However, I still do admire your gusto in repaying your debt as quickly as you can! Thanks for the inspiration.!

    Reply
  10. J

    My husband and i paid off $65,000 in 18 months not making much more than 70k! For all those struggling out there…take encouragement. I do not agree, however, that going by the interest rate is the right approach. The debt snowball does not make the most sense mathematically but there is a huge victory effect everytime you pay a debt off. Keeping motivated is key!

    Reply
  11. Amber

    This is SO impressive how quickly you paid it off! We are currently chipping away (and blogging about) our 550k (you read that right) in student loans, so thanks for sharing. Very encouraging!

    Reply
    1. Eric

      Wow, that’s some serious student debt to pay off! I just popped over to your site, and with a law degree and dental degree living in Tulsa, I bet you’ll be out of debt before you know it.

      Reply

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