Paying off my 6-figure debt was a huge accomplishment. So much that I immediately downloaded all my payment records and saved them so no one can tell me otherwise.
Now that I’m more financially curious, I wanted to find out exactly how much I paid towards my student loans.
In doing so, I might as well share my struggles, fears, and thought process along the way. Feel free to read the lessons I have highlighted throughout this article as I break down how I paid off $100,000+ of debt.
For those who are curious on how I accrued these loans in the first place, continue onward. Otherwise, just skip forward.
Background: Debt Accumulation Phase
List of all loans:
Loan #0013 was taken out in undergrad, I needed to consolidate this loan to where my 12 other loans were to meet eligibility criteria for my initial loan repayment plan
Bachelors of Science in Kinesiology: ($9,504.14 + 4 years of study)
I accumulated $9.5k during my undergraduate years. This cost would have been non-existent if I had gone to community college. While it was expensive, my local university provided me with leadership and networking opportunities within their pre-physical therapy student association that lead me to be an exceptional candidate for one of the nation’s most competitive physical therapy (PT) programs.
Solely based on the life-changing experiences I had during my undergraduate years, I cannot say I regret my decision. However, the better financial move would have been to go to a community college. All three of my siblings went to community college prior to a university and came out with a much better return on investment on their education.
Lesson # 1: Unless you’ve received a full ride or are attending a university for a very specific program, attending community college for your pre-requisite courses could save thousands.
Doctorate of Physical Therapy: ($87,429 + 3 years of study)
It was my goal to become a PT and I was convinced that I had no other choice despite the high cost. Unfortunately, my graduate program did not provide scholarships to students no matter how good their grades were.
I became even more devastated when I found out state and federal grants that were applied during my undergrad year do not apply to graduate students. To make things worse, in 2012, laws changed where graduate students no longer were eligible to receive subsidized loans.
Addressing the big 3 expenses (housing, transportation, and food) is the most effective way to lower your living expenses while in college and while paying off debt.
During my 7 years in college, I lived at home with my mother and siblings. My siblings and I didn’t have to do anything except work towards a cleaner house and made sure we were around for dinner.
For me, the thought of spending thousands of dollars on a used car and having to deal with maintenance, traffic, and fighting off sleep at the wheel while traveling to school seemed like a headache.
To me, a car was an inconvenience when public transportation was available. Especially, since the train station was only a mile away. Often my brother and I would time ourselves running the distance and compare our times in an unofficial contest. I think he still holds the record at slightly under 6 minutes. Maybe after I fix my knee, I’ll shoot to break some records.
My mom cooked in bulk which made packing leftovers easy. Since meals consisted of home cooked Chinese food, my classmates were often left jealous. I doubt anyone negatively judged me or anyone else from doing the same thing. Even if they did, I wouldn’t care and neither should you.
Books & other expenses
Books are costly, but they can be greatly mitigated. I can honestly say that I don’t think I spent more than a $500 on text books throughout my years in undergrad and more than $1000 in grad school. How? Integrate yourself in a network of peers following a similar curriculum.
In undergrad, it was the Pre-physical Therapy Student Association for which I eventually became elected president and we initiated a book swap program. Additionally, I hustled and poached potential buyers from the university library. I researched where certain classes were held the next semester, posted flyers on campus, and used email list-serves to sell to other students. Lastly, I also looked for international versions which are a fraction of the costs of domestic texts. I simple bought low and sold high. In the end, I ended up selling all my undergrad textbooks — some for profit (I learned a lot of this from my wife who was also a hustler).
During grad school, I consulted with upperclassman to determine how frequent these “required” books were actually used. I eventually found a senior classman who had a similar learning style as me, so I relied on his judgement and only purchased a handful of books that were used.
I also never purchased books from the university bookstore, online was always more affordable. If I didn’t get the book online, the university library carried limited electronic and paper qualities I could use. Also, my classmates were always willing to share during study sessions.
As far as non-educational spending, I went out enough to not seem like a complete weirdo and when I did, I avoided splurging. Credit cards helped pay for outings, but I never missed a credit-card payment and I still haven’t to this day. Life was a bit tamed, but it was all about setting myself up for success.
Income While In School
While earning my bachelors degree, I worked various jobs as a server, teaching assistant, PT-Aide and caterer for a temp agency. In doing so, I saved $10,000 of the $16,000 I made throughout my 4 years in college.
The money I saved in undergrad helped me survive grad school where my earning potential was limited. While I worked a few hours a week, most of my time and energy were dedicated to my studies. Also, I was in no rush paying off my $9,500 student loan from undergrad since it was subsidized. Meaning, the government would be paying any accruing interest while I was in school.
Lesson # 2: Always pay yourself first. This means to put money in your savings account before spending on non-essentials. You never know when you’ll need it.
I applied to a couple dozen scholarships throughout my educational career. While I don’t remember them all, I can’t forget the 3 that awarded me a total of $15,000.
SciTech Scholarship: $3000 x 2 years = $6000
- I applied to this scholarship twice and received it both times!
- I would have continued to apply, but this program was discontinued due to insufficient funding.
- It appears this program has been reinstated as of this publication.
Individual Development Accounts (IDA) program: $4000 x 2 years = $8,000
- I also applied to this one twice.
- This is one of the most interesting programs that sounded too good to be true.
- This program encourages you to save by giving you a 400% match on your savings up to $1,000.
- I was under the impression at the time of award that it was a 1 time reward.
- That may or may not have been true. In either case, it is currently renewable for 3 consecutive years.
- The National Association of Letter Carriers also has a $4,000 scholarship that I was not aware of until now.
Lesson # 3: During the summer, students can earn more money spending 2 hours a day applying for scholarships compared to 8 hours a day waiting tables.
May 2014: Graduation & Initial Student Loan Repayment Strategy
I graduated in May 2014 and my first payment was not due until December.
Despite employing strategies to mitigate costs while in school, I borrowed $96,933.14 for tuition alone.
Realizing that the popular Income Based Repayment (IBR) plan is a loser’s game and the Standard Repayment Plan would leave me without a life for 10 years, I had only two options:
- Pay off my loans as quickly as I could
- Or seek Public Service Loan Forgiveness (PSLF).
At the time, it was the clear choice to go the PSLF route since I calculated I would be paying about a fourth of what I borrowed over 10 years. It was a no brainer — or so I thought.
The only things I needed to do was to:
- Make 120 qualifying loan payments (a minimum of 10 years)
- Working full-time for a qualified employer (Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code)
- Enrolled in an income based repayment plan (Such as the Pay As You Earn)
- Submitting necessary paperwork annually (Annual application, employment verification, and pay stubs)
I had all my paperwork squared away and was ready to commit to 10 years of making qualified payments. My loans should then be forgiven (If only it were that easy).
December 2014: My Balance At Repayment, Let’s Begin!
I was surprised to learn that my principal suddenly grew by $10,000! When my grace period ended, it triggered something called capitalization. This is where your outstanding interest gets added to your principal.
Lesson # 4: Pay off all your interest before the end of the grace period to avoid capitalization unless you are 110% sure your loans will be forgiven tax free
Ultimately, my principal increased from $96,933.14 to $107,512.32.
After catching my breath, I figured it didn’t matter because my loans were all going to be forgiven under the PSLF program… right?
My First Payment Under the PSLF
I was accepted into a residency program who was a qualifying employer according to PSLF rules. I couldn’t be happier earning a $62,400 salary and only having to pay $185.47/month towards my loans. This is dramatically lower than the $1,200/month I would have paid under the standard repayment plan.
I learned that 100% of my payments go to interest before enough touching the principal. This meant that my $185.47 payment only applied to my interest which was accruing at over $600/month. My student loan balance increased by over $400/month and number will only grow due to compounding interest.
I was initially nervous watching my balance increase but I convinced myself it wouldn’t matter because my plan was to have it all forgiven anyway, but then there came a problem that changed the course of my life.
I did not anticipate my time with this PSLF qualifying employer would be short-lived. I was a wide-eyed new grad PT who was pumped up to help as many people as I could. The last thing I expected was workplace intimidation, bullying and abuse leading to many levels of physical and mental health issues that I had to recover from in the years after.
I knew could no longer stay at what I thought would be my dream job. It was my first place of employment and the environment turned out to be toxic. After the longest 12 months of my life, my contingency plan to transition to another qualifying employer backfired as they were recently bought by a for-profit company. I was left frustrated and depressed from months of unsuccessful searches for non-profit facilities.
Rather than frame my search for employment around qualifications for public service loan forgiveness, I framed it around where I would be most happy. I figured no amount of loan forgiveness would be worth the stress, unhappiness and uncertainty I was experiencing.
By no longer being limited in my search, I quickly found a supportive position in a healthcare facility within the private sector and resigned from my first job. At this point, the most certain and efficient way to get rid of my loans was to pay it off as quickly as possible.
Up to this point, I already paid $2000 in interest and accrued an additional $5,000 in interest after just 1 year! I briefly dwelled on the fact that I could have saved thousands of dollars if I decided to aggressively paid my debt from the get-go, but I know I needed to move on.
Lesson # 5: Choose a repayment plan you are 110% positive you can commit to no matter what happens. This is my $7,000 lesson.
December 2015: My Revised Repayment Plan
No longer pursuing public service loan forgiveness meant that my monthly payments were no longer correlated to how much I earned. I felt that I could focus on increasing my income without any consequences.
The plan was simple: Earn as much money as I could, spend as little as possible, and put the difference towards my student loans.
I also signed up for automatic payments, which lowered my interest rate by 0.25%
Lesson #6: Sign up of Automatic Payments to reduce your interest rate! Refinance when you are eligible.
New Job + First Month In Debt Demolition Phase
I started my new job in December 2015 with a negotiated salary, I increased my income by 10% to $69,000 and I felt comfortable enough to begin attacking my student debt.
Lesson #7: Negotiate your salary ㇐ don’t leave money on the table.
I decided to nearly EMPTY my bank account by making a HUGE lump sum payment on my loans.
December 2015 Payment Summary: $59,682.64
As you can see, from the graph above, I tried my best to use a combination of the debt avalanche and debt snowball strategy. In my first month attacking my debt, I completely paid off 7 of 13 loans totaling $54,205.67.
I paid an additional $5,476.97 on my remaining loans, but since it did not show well on the graph, I decided to place them in chart form below.
Since I was still enrolled in the Pay As You Earn Program, I was able to minimize my payments towards low interest loans while targeting high interest loans. Remaining on this program allowed me to mitigate risk. If I lost my job, I could go back to making $200 monthly payments without any hassle.
By the end of December, I paid $59,682.64 towards my loans.
Full Disclosure: Only about half of that was my money.
During my 14 months of professional work in that hell hole I called a my first job, I earned $46,000 after taxes and deductions. Of that money, I saved up a whopping $35,000. This 76% after tax savings rate was only possible living at home, living frugally, eating leftovers and taking public transportation to work.
Most of my spare money went to contributing to household bills to convince my mom she didn’t need to work overtime any longer.
While she did stop working overtime, she continued to offer to help me financially. I finally gave in and she provided a $30,000 personal loan with the agreement to allow me to pay her back. I understand this is something that is not available to everyone and I am very grateful that my mom was in a position to help me save me thousands of dollars in interest.
Lesson #8: Sometimes, you just need to accept when you need help. Your friends and family may be more than willing to give it.
One thing I wish I did at this point would be to refinance my loans. Doing so would have qualified me for a lower interest rate. The fact of the matter is that I quickly disregarded it as an option. The fear of the unknown overshadowed the potential cost-savings. I did not think to learn more about it and apparently I have a doctorate degree. At the same time, if I refinanced, I forfeit the safety net of lower monthly payments through the PAYE program.
Lesson #9: Refinance your loans for a lower interest rate as soon as you can.
January 2016: Increasing my Income and Reducing my Expenses
My goal was to pay off the federal government before my wedding on October 1st, 2016. The only way to do this was to increase the gap between what I earned and what I spent.
Increasing My Income:
In addition to making $69,000/year from the new job, I also picked up a second job working a total of 56 – 64 hours per week. In 2016, I earned an additional $16,000, bringing my total gross income to $87,000.
Further Reducing My Expenses:
I continued to live at home with my mom and siblings while paying $500/month towards bills. My older brother, who had a family of his own, was able to help me with the internet bill. I switched mobile carriers and got rid of our verizon service. After all that’s said and done, I reduced my responsibility to $300/month.
Continuing to live at home, bringing leftovers to work, living frugally and not purchasing a vehicle made it possible to achieve an average of 88% after-tax savings rate with the majority of dollars going towards my debt.
Lesson #10: A form of house hacking is staying at home with parents. Even for a year, it can accelerate your progress to paying off debt and give you a chance to get your sh*t together.
2016 Payment Summary: $53,527.85
Looking back, I can’t believe how much I worked. I distinctly remember the cold months where I worked 7 consecutive days, 2 of which were 14 hour days between two jobs.
Working like a madman, I quickly burnt out and went back to 48-56 hour weeks.
The large payment in July was when my wife-to-be generously lent me $10,000 after I realized I could not pay off these loans before the wedding. I am glad she paid off her own loans and was in a place of financial strength to help me meet the goal of being free from student debt before the wedding.
October 2016: Goal Met!
With perseverance, financial savviness, and support from family and friends, I demolished my enormous debt before October 1, 2016! We tied the knot without having to worry about paying another cent of interest towards my student debt.
How Much Did I End Up Paying?
Placing all my numbers in a spreadsheet, the total the amount I paid is $115,227.19 between 2014 and 2016. $10,579 of that was accrued interest during school and during my grace period. Another, $7,714.87 accrued during my repayment period.
What strikes me is that I accrued approximately $7,000 of interest while I was pursuing the PSLF program. Comparatively, I only accrued $700 in the 8-9 months that I was aggressively paying off my loans!
In total, these loans cost me $18,294.05 or 18.89% of what I borrowed!
Seeing how the stock market rose in those years, I would have been better off investing my money. However, no one can predict when the market will shift. Even with the investment knowledge I have now, I would not risk a certain 6.28% interest rate on $100,000 for uncertain gains in the market.
It’s much more important to make decisions that allows me to sleep better at night.
As you can see, paying off this amount of federal loans at my starting income was no easy accomplishment. For those on a similar path, I hope my story inspires and guides you through your own debt free journey.
My wife and I are now on the journey to reach financial independence, but you’re probably wondering about the $30,000 borrowed from my mom and $10,000 borrowed from my now wife.
Good news! I paid back my wife in July 2017 and am paying my mom back in a unique way through investments. Follow here for updates.
As always, feel free to reach out if you have any questions and please share with others that will benefit from this information.