How to Pay Off $23K in Student Loans in 10 Months
Find out how one recent college grad paid of all of his student loan debt in 10 months.
By Kathryn Knight Randolph
January 28, 2016
According to a 2013 survey by One Wisconsin Institute, it takes the average borrower roughly 21 years to pay off their students loans – even on a “ten-year repayment plan.” So paying off exactly $23,375 in student loan debt in 10 months sounds impossible, right?
Not for Jordan Arnold, a recent college graduate in Indiana. TIME reports that Arnold paid off all of his student loan debt from May 2013 to March 2014. Below is his strategy, and it might just work for you.
1. Start making payments as soon as you get a job.
When Arnold graduated from Indiana Wesleyan, he started making payments on his student loans as soon as he got a job. Student loans allow for a six-month grace period during which no payments are required after a student graduates. This six-month grace period exists so that students have time to find a job.
But if you’re like Arnold, and you find a job before that grace period ends, it’s a great idea to begin making early payments. These payments will be made before interest begins accruing, allowing you to save in the long run.
2. Move back home.
Rather than spending hundreds of dollars on rent each month, Arnold moved back in with his parents. This not only saved him the cost of an apartment rental but also utility expenses.
If moving in with your parents isn’t an option, find a roommate. This way you can split the costs of renting and utilities, and put more money toward your student loan payments each month.
3. Get a second job.
Arnold made great sacrifices by getting a second job delivering pizzas after his 9 – 5 desk job with an insurance company. Yes, he was exhausted. No, he probably didn’t have much of a social life. But with his combined jobs, he was making payments upwards of $2,000 each month, according to his interview with TIME.
While getting a second job may sound exhausting, it pays off in the long run – literally. And like Jordan, as soon as your debt is paid off, you can quit that second job.
4. Make extra payments.
As you repay your student loan debt, keep in mind that you can make a payment larger than the minimum required each month, just like Arnold. And as a rule of thumb, if you have extra money come in for whatever reason, use that to make a second payment on your student loans during that particular month.
Arnold received a $3,000 tax refund, and rather than spend that money on an awesome trip, he used it to finish paying off his student loan debt. With that extra payment, he was able to pay off his student loan debt two months sooner than he had originally planned, as he states in his interview with TIME.
5. Set a goal AND a reward.
Arnold set a goal for himself: pay off all student loan debt within a year. But he also rewarded himself once he achieved his goal. Shortly after paying off his debt, he made a trip to Florida with his buddies.
You can reward yourself too once your debt is paid. Maybe that’s in the form of a trip, a new laptop or a shopping spree. Explore different options that will motivate you throughout your student loan payment period, and serve as the light at the end of the tunnel.
Jordan Arnold’s story proves that graduates can pay off a significant amount of debt in a short period of time. While a job is necessary, perseverance to reach that goal is just as vital. However, being debt free just a year after graduating from college definitely sounds like it’s worth it!
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