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$52,050.74: A Farewell to Student Loans

This article was written by in Debt Reduction. 38 comments.


Ah, student loans. The things that remember you long after you’ve completely forgotten the entire college experience.

Although I finished college in 1997 and graduate school in 2000, loan payments to Sallie Mae have been a constant fixture ever since, like a little wound I’d nurse which just wouldn’t stop bleeding.

Even when making double or triple monthly payments, the amount I owed hardly seemed to diminish at all. I set up direct deposit, did everything I could to nudge that low interest rate down even further, and eventually consolidated my loans, but I was still frustrated, unable to see that light at the end of the tunnel.

Perhaps this was because (and I’m actually facing this number in its entirety for the first time ever right now): that tunnel was pretty darned long. $52,050.74 long. Looking at it actually makes me feel faint.

And that’s just the principal – that number doesn’t even take the interest payments into account. I’m afraid to figure that total out.

I won’t say for a second that my higher education wasn’t worth it – it was just a bit of a hard road to travel, despite my high level of motivation and desire to be self-sufficient. My parents either couldn’t (Mom) or didn’t (Dad) contribute to my college education, so I waited tables like crazy throughout highschool, washed dishes for a whopping $4.50 an hour within the work study program once at college, and got student loans, both subsidized and unsubsidized, to cover the rest.

I still wasn’t anywhere near paying off the 4 years of undergrad study when, after several years in the workforce making double loan payments each month, I decided to go to graduate school. Another $18,000 added to the sum, and that’s because I chose to complete my Masters degree overseas, where it was cheaper.

That loan amount kept swelling like an engorged tick, but because it was in a flurry of separate disbursements, I never really faced the total, just a few thousand here and ten more thousand there. My interest rates were pretty good, so I’d just been paying it down monthly ever since, hoping one day to reach the elusive endpoint.

Last year, I started becoming more financially aware and contributing to my savings account. I was so happy that I had finally amassed some money in savings that was earning 5.25%, but then I noticed that my consolidated student loans were still costing me more than that in interest at a rate of 5.38%. And because of my salary, I don’t get to deduct a single penny of that interest from my taxes.

Because I was just paying under $200 a month, it didn’t seem that bad, but once I really got into crunching the numbers, I realized that I’d been paying around $75 a month in student loan interest, which turned into a big ouch when I looked at the cost annually. And despite all my extra piecemeal payments, nearly ten years later I still owed around $22,000 to my old friend Sallie Mae.

I sought the help of a financial advisor. She explained that although some of my residential and rental property mortgage rates appeared at first to be higher, after tax deductions, my student loans were hands-down the most expensive of all my loans.

Based on her advice, I decided to grab some cash out of my coveted savings account and start hacking away at the remaining loan amount, paying as much as I could whenever I found I had uncommitted funds at my disposal.

My tax refund and all my savings except my emergency fund went right to Sallie Mae, knocking off $10,000 from the total. I moved my emergency fund to a high-yield savings account earning 6% at FNBO Direct, and started funneling every extra penny into that account, elated each time I was able to transfer money in. The interest was a nice bonus, giving me more incentive to store funds at FNBO Direct before surrendering them, never to be seen again. Once there were sufficient funds in the account, I’d do yet another payment to Sallie Mae, $500 or $1000 at a time.

It felt like the wound was hemorrhaging, and I dreamt of having a nice big savings or investment account instead, but I remained committed to reducing that total.

And around 2 months ago, I finally got that total just under $4,000. The end was in sight! I started bringing more lunches, buying less clothing, socking away funds just a little bit more – anything to finish that final lap.

And today, I did it. I sent my final payment of $3,880, and bid my old friend Sallie Mae goodbye with a cheer.

The number was $52,050.74. It was outright terrifying, a giant monster that wouldn’t fit beneath the bed. And as of tomorrow, that number will be zero.

In ten years, I have paid off $52,050.74 in principal, and still more in interest. I say it again because now I like that number; now I’m very, very proud.

Updated June 9, 2011 and originally published October 17, 2007. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Along with her partner, Sasha owns and manage six residential rental units. Sasha endeavors to support the causes and organizations she believes in through more conscientious spending practices. View all articles by .

{ 38 comments… read them below or add one }

avatar Amanda

Congratulations! I can’t wait to be in your position, truly inspirational!

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avatar wealthy_1

Congratulations and continued success! I wish debt free forever!!!!!!!!!!

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avatar Curtis

I just finished off my undergrad loans earlier this year (year 8 after school, though I only had 11 grand), but I still have a few grand left from my MBA that I finished last year also. I had employer reimbursement for most of it, but had to pay it back when I left. Luckily, I got my bonus about then and it ended up a wash.

One thing I notice most mortgage brokers leave out on the tax savings is the fact that you get a standard deduction. For married filing jointly like me that is over 10k this year. So, I don’t really save anything on the first 10k of mortgage interest each year, I would have had that tax savings anyway.

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avatar john

Congrats! I’m working on my own (and wife’s) college debt of almost $70k. Our loans are at 3.25%, and should be lowered an additional .5% soon, so we’re focusing on saving and investing right now.

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avatar mapgirl

Zowee. That’s a lot of money. Good for you. I am sure the blog revenue helps. *winky*

So how does it feel? Like a huge weight off you? What’s your next goal now that you’ve got cash flow freed up?

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avatar Andrea

Good for you, that’s quite an accomplishment. Most people just let student loans languish, I think mostly because the financial advice tells them that other routes are more profitable but there’s an immense relief when things are paid off and you have fewer liabilities.

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avatar klerg

Debt free is king!!! Congrats Flex!!!!!!!!!!

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avatar Luke Landes ♦127,490 (Platinum)

Just to clarify — this is Sasha’s post and Sasha’s achievement. Perhaps we need something to better differentiate our posts. My remaining $14,000 in student loan debt will be paid off sooner than planned now that interest rates on savings have dropped, but not yet.

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avatar Chief Family Officer

Congratulations, Sasha! That’s really awesome :D

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avatar Sue

That is extraordinary! Good job. Well done. Congratulations.

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avatar Personal Finance Blog

Great job! Congratulations!

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avatar Kris

Sasha, congratulations! That’s outstanding. I paid off Sallie Mae last month, and MAN did it ever feel good. The best part was receiving a “Congratulations. Nice doin’ business with you” e-mail yesterday. Way to go!

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avatar mga

Congratulations on that milestone of life. I achieved that a few years back and it was a great feeling to have.

Now I’m working towards eliminating the mortgage payments, while trying to balance retirement savings with that. I should probably find a good financial advisor like you did to help me figure out a good balance of the two.

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avatar Sasha ♦644 (Dime)

Mapgirl,

I don’t really know what my next goal is, but I’m up for suggestions. I have a few mortgages between my primary residence and rental property, and I could go towards trying to pay them down sooner, but with assuming I’l resell my primary residence in a few years anyway, it may not be worth it.

Really, I’d like to grow my cash net worth. I keep seeing Flexo’s rise monthly on this blog, but my finances were all channeled to the debt so I’ve not seen my worth rise much at all in the last 2 years. Also, I still have too many expenses.

Oh, and I’m just the associate blogger here… =)

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avatar Sasha ♦644 (Dime)

Kris,

Thanks. I’d love to get that e-mail:

Dear Sasha,

Thanks for doing business with us. We promise never to bother you again. Ever.

Really, forget we ever existed.

Love,

Sallie Mae

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avatar Sasha ♦644 (Dime)

Andrea,

I kept hearing the same thing–that I should just ignore the debt and try to invest in stocks which would earn more. But I’m not much for higher-risk investments, and I decided I’d rather get rid of what seemed like a slow leak of my personal funds than take a chance on something that can fluctuate either way.

Also, the loans just annoyed me in principal. I want to remember college fondly…

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avatar Sasha ♦644 (Dime)

John,

That’s a very nice interest rate–be sure to lock it in if you get it ever lower! My rate used to be more like that but I was late in consolidating and the rates went up. One of my dumber moves….

Sasha

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avatar John

Sasha,

The rate is locked in, so I’m set there. We consolidated a few years ago. The .5% reduction is for a certain amount of on time payments.

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avatar Kris

Sasha – TOTALLY. I printed mine out and I’m putting it on my fridge.

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avatar Marie

Thanks for posting this. My husband and I both have masters. I got mine in 2005 he finishes his Apr 2008. We had $55,456.27 in student loan debt and I panicked. We make 21k a year (have 2 kids) and got it down to $51,168.79 for a total paid of $4,287.48 to date. I was feeling like we weren’t making any progress. But your post has encouraged me to keep chugging.

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avatar Vixen

Major congratulations are in order.

I just had to take out my first student loan. It scares the shit out of me. Fortunately, I did city college the first two years. I’m looking to be in something like 10k in debt by this time next year. Eeeek.

Not to mention, I’m planning on a Ph.D after this. That equates to: super expensive schools! My least expensive option would be something like UCLA which is still 13k a year.

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avatar anj

Usually Ph.D’s are fully funded. Have you tried looking at PhD programs that are fully funded in your field? Also, having an employer that will bay for this? It seems this may be a good idea so you can focus on killing your debt before it grows and not worry about adding more to it. Also, the Return on your PhD investment will likely be 100% return if you do something like that.

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avatar Meg

Congrats! What a wonderful feeling it must be.
I can’t wait until I feel it. Only 10 more years.

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avatar FinanceAndFat

That’s awesome! Congrats!

My wife and I have about $65K combined. Yeah, that’s going to take a long time…nice to see a student loan success story though!

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avatar Sasha ♦644 (Dime)

Marie,

I think it is important to give yourself some leeway as well. While I paid more to my student loans during certain periods, there were some times when my financial focus needed to be elsewhere, so I just paid the minimum, like when I was in grad school or dealing with unexpected expenses. With your income and family situation now, I can understand that it might be hard to really focus in on the debt. Understand that even if you are paying the minimum, you’re still making progress–with a family on a tighter income, the emergency fund becomes even more important, so that may be where your priority lies. You can always work on that fund, place it in a high-yield savings account, and use the interest as extra, “Bonus” principal payments on your loans.

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avatar Thrifty Penny

That’s awesome! Congratulations! Do you hear that around the corner? That’s right, it’s the sound of sweet success. Corny, I know!

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avatar SJean

Congratulations!! I clicked over because my name is also Sasha, and it is just not that common of a name.
My student loan debt is 20k sitting at 0% interest, but it still bothers me!

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avatar Stephanie

Wow! Congratulations! I’m still chipping away at my student loans. But reading your post reminds me that one day, I can be free of student loans, too!
And I also got some ideas of how to pay my student loans off faster without putting myself in a place where I’ll be scared of things happening. I just will keep my emergency fund at a certain point, and every time it reaches a certain higher point (due to automatic deposits and earned interest) I can pay that big chunk to my student loan company!

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avatar IndependentGirl

I’m just one more person here to say “Way to go!!” Thanks for sharing.

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avatar nathan

If you work in public service and make monthly payments for 10 years, your remaining balance is paid off courtesy of your friendly federal government. Thanks to the Democratic party controlled Congress for finally making this happen…making education a priority. See Public Law 110-84.

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avatar Ray

Hmm interesting..I’m the opposite. I managed to consolidate my $35,000 law student loans at a very low fixed rate at 2.25%. I’m in no rush to pay them off since they’re better spent sitting in an interest account.

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avatar Ex-student

Hi everybody, Since the cost for studying in an american college or university is so high and getting a loan for that is so high too….many american students started to study, on the other side of the border, in Canada where the cost of studying is generally 10 000$ which is much less than the majority of the american colleges and universities. Lower you debt potentiel as much as possible. Thanks

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avatar Mike

Fairplay to you. That is some going. I love to read about success stories like this. It gives inspiration to all the rest of us.

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avatar AJ

I have $110k in student loan debt for just undergrad. I can not even get a job that pays me anything because I did liberal arts. I am working on changing things though.

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avatar thegooch

Congratulations!!! i just started tackling my loans. They are evil

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avatar Sean

While I can say, “Congrats on paying off all that debt, and I am very happy for you”, I’m still glad I avoided that whole mess. In the ten years you struggled to pay off those evil loans, I made a total of about $800,000 working (that also would include interest or 401K funds matched by my employer). I’m much better off for it today. My fiancee’s student loan just went up by $190, and she still owes $20K+ on her loans. College has become an evil empire that I wouldn’t wish on anyone unless they can afford to pay as they go. The whole student loan bubble is going to blow big and I feel for anyone bought in the blast, as this is something that cannot be written off by bankrupcy – blame the government for getting involved and stepping on what wasn’t broken. Do a little research and you’ll be amazed at what’s really happening.

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avatar Alana

Congrats!! I am trying to pay off Sallie Mae right now as well. I am doing my best but it is daunting looking at my balance. My interest is paid off though. It took me about 10 months to pay off about 5k in interest alone. Your story inspires me so much. Recently I have really been cutting corners to even piece meal my payments to my dear ol’ friend Sallie. I am currently teaching ESL abroad and send home as much as I POSSIBLY can to bandage my wound to Sallie. I’m cutting corners here abroad.. not traveling every weekend and cutting my spending. I’m not a shopper for clothes and “must haves” so most of my paycheck is going toward food ( a girl has to eat) and small fees such as cell phone, internet, and electricity. Your story that was nicely written inspires me to suck it up and do my best to clear my debt with Sallie. It can be done.. there is light at the end of the tunnel. Thank YOU!

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avatar Chris Pier

Alana:

Would you recommend teaching abroad as a means to help pay back your loans?

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