A day I have dreamed of for years has arrived.  I have submitted my final student loan payment.  Halle-frickin’-lujah!

Loans 3

A few words about student loans

I understand that student loans are necessary for some and many people would not be able to afford a college education without them.  That’s a sad fact that decries both our incredible levels of income inequality and ever-growing cost of higher education, neither of which I want to get into right now.  I believe that student loan companies (with the assistance of ridiculously over-priced colleges and universities) are preying on young people who dream of a better life.

I was fortunate enough to have my undergraduate degrees paid for by my parents.  This was a blessing I couldn’t fully appreciate at the time, but I definitely do now.  However, as a teacher in the state of Connecticut, I am required to earn a master’s degree.  I also decided (before I had a child and before the changes to education) that I wanted to pursue school administration and earned an additional 30 credits to earn that certification.

Let me say up front that I was an idiot with money when I was younger.  In my eyes my loans were free money.  I took all the money that was offered, regardless of how much I actually needed.  Idiot.  I paid the minimum amount for the first couple years.  Idiot.  I refinanced my loans with the first company that called me.  To a 30 year loan.  Idiot.  Idiot.  Idiot.

Then I smartened up.  Thankfully I got a fair interest rate on my loan refinance, so I didn’t need to do anything about that.  I did, however, need to do something about my loan term.  Not wanting to make another dumb decision, I didn’t refinance.  Instead, I started paying a little extra.  First, a few dollars, then I doubled my payment, then I started putting everything I had towards my debt.  I applied for loan forgiveness for teachers.  Slowly, the number started to drop.  Like losing weight, the progress I was seeing was inspiration to keep going.

So, here are the numbers

Total loan amount (at refinance): $45,526
Interest rate: 3.75%
Loan term: 30 years
Interest accrued: $27,430

Actual repayment length: 8.5 years
Actual interest paid: ~$9,000
Interest saved ~ $18,430!!!

Because how much I paid varied greatly over my repayment period, I’m not sure precisely how much interest I paid, but I did do some fancy math to get an approximate figure of $9,000.  That’s still a crazy number and I’m more than a little embarrassed, but I’m also proud that I was able to reduce my interest paid by more than 66%.

How we did it

My student loans were a huge burden on my family and my psyche, even more so because much of my debt was taken on pursuing a degree I no longer plan to use.  For me, it was public enemy number 1.  In December of 2013 I noticed that my balance was low enough to pay off, using our savings, and still have a 6 month cushion.  However, neither Mr. O nor I felt comfortable with taking out the money all at once.  Instead, we increased our payments to more than would fit in our monthly budget, with the excess coming out of savings.  We set a payoff figure – when my balance reached that number, we’d pay it off.

Well, my friends, the day has arrived!  I used to say I did it because I’m the primary financial caretaker in our house and because the plans were mine, but I couldn’t have done it without the support of Mr. O.  As someone who never had student loan debt, I’m sure it was difficult for him to watch his hard earned money go toward someone else’s.  But every time I’d get down on myself for creating this mess, he’d remind me that my degrees have earned my family more, and that I do plenty to support him in other ways.  We were truly a team in this endeavor, and that’s the only reason we were able to conquer this debt in just 8.5 years.