How Long Should A Student Loan Be?

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Can you see what just happened? My $12,000 student loan suddenly became a $13,682 student loan! During the three years I was in law school, it accrued interest and after the loan was paid off, the unpaid interest was written off. Directly to the director! That was terrible, because now I had to pay the capitalized interest and the new interest that came from it. Nor was it the only loan that Capital received. I had three other loans that capitalized, adding thousands to my principal.

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I consider 2014 the first year I tried to pay off my student loans. As a first year associate, I made an annual salary of $110,000, so I had the income to make a big dent in my loans. I had to avoid the trap of a lawyer’s lifestyle that many of my colleagues fell into.

Wow! I know I paid a lot on my loans, but I didn’t realize how much until I wrote it. Here’s a nice chart showing student loan payments in 2014:

What jumps out at me is the huge payment I made in October. I had a pretty big emergency fund at the time, so my best idea was that I decided I didn’t need all that money in cash and threw a lot at student loans.

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You may be wondering why my payments jump and vary each month. A lot of it has to do with random surcharges when I see my bank balance getting too big. I wanted to avoid what I call payroll, which is why you see random spikes and drops throughout the year.

In 2015, I received a promotion and my annual salary increased to $115,000. Again, I had a good income working here. Here is what my 2015 payments look like:

It looks like 2015 is off to a great start. I took a little extra money from the emergency fund to start the year, which is why you saw the big increase earlier. I’m not sure why I did this, but the best thing I had was listening to Dave Ramsey’s set and I was really motivated to get that loan balance down a bit. The money in my emergency fund wasn’t earning a ton anyway, but paying off my debt was a solid 6.8% return.

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As you can see, my payments jumped around 2015. I kept paying extra as more money was added to my bank account.

Another big thing I did was use three check months to put more money towards my loan. I was paid every two weeks (like most people get paid), so twice a year I saw three checks a month. I barely live on two paychecks a month, so every time a three-check month came around, I threw the third paycheck at student loans.

One mistake I made when paying off my student loans was not refinancing the first year I paid them off. If you are like me and plan to pay off your student loans quickly, there is no reason not to wait to refinance your student loans. Refinancing means you lower your interest rate, which means you pay less interest overall and put more of your money to work for you.

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I refinanced three times while paying off my student loans (many people don’t realize that you can refinance your student loan funds as often as you want). Below are the three companies I used to repay my student loans.

If you are not sure which company to refinance your loans with, a good option is to use a company that can verify several student loan refinancing companies at the same time. These companies are basically kayak or student loan modification price line. You can run a search and your potential value will appear in one place.

My advice is to refinance your student loan with SoFi first – that way you can get free access to all SoFi member events (remember, you can go to these events even after you pay off your SoFi loan).

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Then refinance your student loan with Credible and choose the company that offers you the lowest interest rate. If you do this, you get all the benefits of renewing once with SoFi (ie access to all SoFi events) and you have the lowest interest rate on student loans (plus $200 extra to use credit. to renew your student loan ).

Or if you’re like me, you can go crazy and refinance your loans with almost any company. That’s pretty cool what I did, and even though it’s not necessary, it helped me take advantage of a lot of signup bonuses.

If you are confused about refinancing, check out my article on my student loan modification experience where I go through what I did when I refinanced my student loans. You can read that post here: My Student Loan Refinancing Experience.

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I started 2016 with another raise, this time to $125,000 a year. Again, I had enough income to pay off these loans quickly, assuming I didn’t fall into the lawyer’s trap.

So what happened here? Why am I paying so little for the first 5 months and suddenly down