When I made up my mind to pursue a graduate degree, I promised myself that I would not graduate with a huge student loan payment hanging over my head.
I was able to pay for most of master’s degree with student fellowships; however, when an employment opportunity that I could not pass up beckoned during my final year, I gave up my fellowship, and took out a student loan. Seven years later, I’m happy to report that my loan will be paid in full in just a couple of months.
Here’s how I did it:
1. I Borrowed Only What I Needed
Too few students learn the trick to paying down student loans until it’s too late. That trick is to be a careful borrower. For two semesters of graduate school, I could have borrowed upwards of $20,000.
I borrowed only $8000 – still a considerable amount of money – just enough to cover my tuition costs. I worked to pay off the rest of my expenses.
2. I Started Planning for Repayment Before I Had to Pay
Although my student loan was relatively small, at least in the world of student debt, it was huge to me. The thought of being in debt when I graduated made me nervous, so I started putting a little money in savings each week to pay toward my debt.
It was a piddling amount – $10-$20 dollars per week, much of it in pocket change – but by the time the semester and my six-month grace period were up, I had a head start on my repayment.
3. I Started Small
Student loans are more flexible than most other loans, giving you several repayment options. I took the lowest payment offered to me. That may seem contradictory, if my goal was to repay as quickly as possible.
My reasoning was this: making a smaller payment made my debt seem less frightening. And, as I moved up the pay scale employment-wise, I was always free to pay more toward my debt.
4. I Made Repayment a Priority
When my grace period was almost up, I did two things: one, I had direct deposits from employer authorized for the savings account I’d set up for my loan repayment, and two, I signed up for direct debit for the amount of my student loan.
I saved on interest by opting for the direct debit, and by paying for my student loan before I even saw my paycheck, I didn’t have the opportunity to spend the money that was supposed to go toward my debt.
5. I Worked Two Jobs
And sometimes three. Whatever it took to pay off my debts. Yes, it was hard, but it was also worth it. Student loans are increasingly an integral part of the higher education experience.
Repaying them won’t be easy, but the sooner you start planning for repayment, the more prepared you’ll be when you get that first loan payment notice in the mail.
Get Someone Else to Pay Off Your Student Loan
There are two main ways of paying off your student loan. The first is to pay it off yourself. You get a job, and then scrimp and save, and live on beans and rice while you put every penny toward paying off your bill. The second option is to get someone else to pay your school loan for you. I chose the second route, and you might be able to as well.
Getting Someone Else to Pay Your Bill
Generally, companies and organizations that are willing to help you pay off a student loan want something in return. They want the new employee to take a hard-to-fill position, work in a difficult area of the country, or agree to stay with the company for a certain number of years.
Of course, in the past two years, as unemployment has risen and the job market has become more competitive, most companies have stopped offering such hiring incentives because many job seekers simply want to get a job-they don’t care where and they don’t care what.
One sector, however, continues to actively hire, and under certain circumstances, continues to offer incentives such as student loan repayment. This sector is the Federal Government. You can search for job openings at USA jobs and learn about the Government Student Loan Repayment program on this link.
Government Student Loan Repayment
Here are some of the highlights from this loan repayment program:
“Any employee is eligible, except those occupying a position excepted from the competitive civil service because of their confidential, policy-determining, policy-making, or policy-advocating nature.”
“Loans eligible for payment are those made, insured, or guaranteed under parts B, D, or E of title IV of the Higher Education Act of 1965 or a health education assistance loan made or insured under part A of title VII or part E of title VIII of the Public Health Service Act. (See Q&A 17 for examples of the types of student loans that are eligible for repayment.)”
“Although the student loan is not forgiven, agencies may make payments to the loan holder of up to a maximum of $10,000 for an employee in a calendar year and a total of not more than $60,000 for any one employee.”
“An employee receiving this benefit must sign a service agreement to remain in the service of the paying agency for a period of at least 3 years. An employee must reimburse the paying agency for all benefits received if he or she is separated voluntarily or separated involuntarily for misconduct, unacceptable performance, or a negative suitability determination under 5 CFR part 731. In addition, an employee must maintain an acceptable level of performance in order to continue to receive repayment benefits.”