First Step: Undergraduate Degree
My parents were incredibly smart and made me work my tail off in high school at a minimum wage job to save money for college. I never had a college fund, or false promises of a stress-free financial situation. I knew college was expensive, I knew I needed scholarships, and, quite frankly, I’d be paying my own way.
I do not resent this. It made me work harder in school, receive a tuition scholarship, and get plenty of waitressing gigs to fund my education.
My dad actually refused to co-sign on any student loans. Both of my parents helped out with expenses such as car insurance, cell phone, and a little spending money here and there. This was a huge blessing. However, the summer before my senior year of college my uncle deployed to Iraq. My aunt had two little babes and was alone on base, so I spent my summer with her. As a result, I needed a little help going into my senior year. I took out a $5000 loan, and diligently started paying it back after graduation. Not a big deal, right??
Second Step: Law School
Well, this is where the you-know-what really hit the fan. I, foolishly, chose a private school so I could start a semester early. I was pretty young and desperate at this point, and would have signed anything to start the next step of my life. I also deferred my undergraduate loan in addition to this wonderful plan.
I used loans to pay for tuition, books, and a modest living stipend. After three years, I had a large number. I mean, L-A-R-G-E number waiting for repayment.
Third Step: Repayment (Ohh, the fun part)
I spent many, many hours on the phone with Sallie Mae, trying to figure out a payment plan that would work. Every time I called, the story would change.
—–No, you don’t qualify for a reduced payment, and once your interest capitalizes, you’ll owe even more.
—-Oh, yes, you qualify for reduced payment and don’t have to make any type of payment for a year!
—-Oh, nope, made a mistake, you need to pay all of your montly interest plus a predetermined amount and, if you’re really, really lucky, we’ll let you pay down on your principal every once in a blue moon.
Yep, these are how every phone went down. And there were many of them. Finally, I decided to go on the Interest Based Repayment plan. Basically, I pay a portion of my loan based on my 2012 tax return and my current salary. After I make that monthly payment, I am free to pay down on the principal of the remaining loan.
I decided to attack my highest interest rate, 8.5% (!!!!!!!!!!), first. I’ll slowly pay that down in addition to my IBR payment, and then attack the next highest interest rate, and so forth. I’m not quite ready to reveal my total loan amount, but I’ll keep myself accountable by giving the status of my current 8.5% loan. I’ll do this for every loan, and if anyone out there is really clever, they’ll add them all up at the end to get the total amount. Wow, what a fun little game, right???
Original loan amount: $15,094.00
Amount after Capitalized Interest: July 1: $19,317.07
My current balance: $18,171.35
Daily Interest Accruing: Around $4, according to Sallie Mae. Lovely.
So there’s my first plan of attack. If I look too broadly, I’ll end my day with too much wine and frozen yogurt, so I instead focus on a small portion. It’s what works for me.
Ok, let me have it: any advice on this current loan attack plan??