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A Major Milestone Reached in My Student Loan Repayment History

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Sometimes I write these student loan entries and wonder what angle I’m going to take on telling my repayment story. Will I write about how painful it is to force myself to not go out and “play” at the bar with the rest of the adults? Will I write about how I don’t shop for clothing as often as I used to and how I find that getting certain clothing items at Wal-Mart is just as good as getting an item from a department store? Or maybe I’ll just write about how my repayment plan has evolved since I set it in motion at the very end of 2009.

One-third down, two-thirds to go!

Today, I write something much simpler and much more exciting. As of about a week and a half ago, my student loan debt fell to $81 thousand which represents a total of $40 thousand repaid in loan principal and fully one-third of my initial student loan debt no longer outstanding. That’s huge! Sure, it’s only one-third of the way to repaying a gigantic amount of money and the $40 thousand that I’ve repaid in principal doesn’t account for the over $10 thousand that I’ve repaid in interest. But that’s okay! I’m really happy that I’m at this $81 thousand mark because I know the next “big” milestone is hitting $80 thousand in total debt outstanding which will be quickly followed by breaking out of the $80 thousand range and into the high $70 thousand range.

That’s progress!

How much progress, you ask? Well, you can scroll to the end of this entry to read my standard boilerplate on these posts where I talk about how much debt I started with and where I’m at today. However, let’s think about this in terms of when I began this aggressive repayment plan back in December 2009. At that time, I owed a total of about $98 thousand; I’ve reduced the principal owed on that debt by $17 thousand in about 6 months. That’s tremendous progress! But what’s great about this repayment plan (and if you know anything about how loans work, you know where I’m going here) is that the more I repay, the less I have to pay in daily accruing interest.

In other words, when I began this repayment plan back at the end of 2009, I was paying something like $8.50 per day in interest to the New Jersey Higher Education Student Assistance Authority (NJHESAA). Today, I pay NJHESAA $5.38 each day in interest – a reduction of more than $3.00 per day. That’s huge when you consider that each payment usually hits the NJHESAA’s coffers every 15 days or so. That’s $45 more dollars every two weeks that can be applied directly to reducing my outstanding principal.

Stick around folks, I think the repayment plan is really going to heat up as the summer moves on…

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. I currently owe $81 thousand, which breaks down to $26 thousand owed to the New Jersey Higher Education Student Assistance Authority and $55 thousand owed to the United States Department of Education. Follow my student loan repayment story on JerseySmarts.com.

Getting Closer to Two More Milestones in My Student Loan Repayments

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You know, sometimes I think about waiting a few extra days to post these updates. Why, you ask? Well, if I waited another week to post this update, then instead of saying that I just knocked another thousand bucks off of my student loan debt, I’d be able to say that I knocked another two thousand bucks off instead. That’s right, folks, I’m closing in on the $80 thousand mark in terms of total debt owed, but for now I’m at settled at $82 thousand and looking forward to hitting two big milestones in the next month.

$82 thousand and counting

The first of those milestones should be coming in the next few weeks when I hit $81 thousand outstanding. When I get to this point, I’ll have repaid $40 thousand in student loan principal since I started repaying these things in the summer of 2006. That’s incredibly significant! Lord knows how much interest I’ll have paid over that same time period…

The second of these milestones will be at some point next month when I hit $80 thousand outstanding. This dollar amount actually marks a double milestone since it’ll mark the $25 thousand balance outstanding in terms of how much that I owe to the New Jersey Higher Education Student Assistance Authority (NJHESAA) as well as the $80 thousand balance outstanding for my overall student loans.

Slowly, but surely, I’ll pay these things off.

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. I currently owe $82 thousand, which breaks down to $27 thousand owed to the New Jersey Higher Education Student Assistance Authority and $55 thousand owed to the United States Department of Education. Follow my student loan repayment story on JerseySmarts.com.

When in Doubt, Stick to the Plan… Always Stick to the Plan!

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Sticking to the student loan repayment plan has brought us back to a familiar place. I’m pleased to announce that effective a few days ago, my student loan debt fell from a total outstanding of about $84 thousand to $83 thousand. As I’ve said so many times before on this blog – another grand bites the dust.

Down to $83 thousand...

And I plan on making these types of announcements over and over again until this New Jersey Higher Education Student Assistance Authority (NJHESAA) loan is retired. I’m going to keep on making these announcements because I intend to stick to my repayment plan. I wrote this back on January 26, 2010:

So, as I’ve said before on this blog – get used to reading these types of entries because I am committed to attacking one of my two outstanding student loans this year. If I can stick to the plan that I created in December, I’ll rid myself of the $39 thousand debt remaining on my NJHESAA loan in the next 18 to 24 months. And, believe it or not, time seems to be flying by these days so I could potentially be free from this loan before you even know it.

Time certainly is flying – here we are at June 7, 2010 already. Can you believe it?! Back on January 26, 2010, I owed $39 thousand to the NJHESAA. Today, I owe about $28 thousand. Reducing that student loan by about $11 thousand in about four and a half months is pretty damn good, I think. However, like one of my friends and commenters Justin and I wrote about in the comments section of a recent entry, that’s $11 thousand that is not contributing to the economy and another $28 thousand that I have no plan to work back into the economy any time soon.

And that doesn’t even begin to touch the $55 thousand that I still owe to the United States Department of Education (USDOE)… But that’s for another blog entry at another time. Today, join me in celebrating another thousand bucks off of my student loan debt!

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. I currently owe $83 thousand, which breaks down to $28 thousand owed to the New Jersey Higher Education Student Assistance Authority and $55 thousand owed to the United States Department of Education. Follow my student loan repayment story on JerseySmarts.com.

Graduates are Drowning in Student Loan Debt – It’s Getting Worse

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While I believe that I have made impressive strides to repay my student loan debt, there are new reports that delinquency rates are increasing in the student loan market. Last week, Forbes posted an article that contained a bunch of interesting information – here are some of the juicier parts of the article:

National credit bureau TransUnion revealed recently that the 90- and 30-day delinquency rates on private student loans were 6% and 7.5%, respectively, in the first quarter of 2010. That’s up from 5.4% and 6.8% in the previous year. Meanwhile, the Department of Education recently released its fiscal year 2008 draft student loan cohort default rates, which showed that federal loan defaults rose from 6.7% in 2007 to 7.2% in 2008.

Rising delinquency and default rates indicate that borrowers are struggling to repay the loans that they took out for college, especially in the midst of the current economic environment. The fact that student loans are unable to be dismissed in bankruptcy has created a financial nightmare for some borrowers. They’re drowning in a mountain of student debt and can’t collect the dividends that a college education is supposed to pay.

That last sentence – the idea that graduates who are drowning in student loan debt are unable to collect the dividends that a college education is supposed to provide – is what I find most interesting. What, exactly, are those dividends in the context of 2010? Can we safely say that college graduates earn more over the course of their lifetime than high school graduates? The studies still say that the answer is a resounding “Yes!” but we do not know how the current recession has altered those findings in the future. For example, if a subsection of college graduates from whichever group that was studied was supposed to make $1,000,000 more in their lifetime than their high school graduate counterparts, then is there data available to adjust for repaying (an estimated) $100,000 in student loan debt as well as being out of work from a high paying job for three years?

I don’t know, but I bet the results would be interesting to look at!

Taking a different view of this issue, I think that the real “dividends” that student loan borrowers are not able to access in 2010 are the great deals that can be had and could have been had on new cars and buying a home. Mark my words – the real estate market will not rebound from its devastating fall from the last few years because we are graduating a generation of students that are too burdened with student loan debt to enter into the housing market. And for those that are able to enter the housing market, they are unable to furnish their new home with the types of consumer goods that keep the overall economy afloat.

I’m not suggesting that this is a good or a bad phenomenon. I’m one of the rare believers that if you take out student loans to attend college, then you should be obligated to repay those loans. Like all things in life, I believe in living up to one’s obligations and doing what you’ll say that you’ll do. If I were to take some personal loans out, I’d make sure to re-pay them, obviously. In my situation, I required $121 thousand in student loan debt to attend college and graduate school and I intend to repay every penny as soon as I can (I’m down to $84 thousand still owed and that number is getting lower every week). However, even though I might be in the minority on this issue, I do think that the student loan suffocation is going to be the silent, stifling factor in this economic recovery.

If you get a chance, take a few minutes and read that brief article posted on Forbes.com and linked above. It talks about the possibility of making private student loan debt dischargable in bankruptcy court as it used to be before 2005. Some interesting stuff…

Realizing My Student Loan Repayment Schedule While Still Supporting Charitable Organizations

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You all know the drill by now: every two weeks or so I’m back with another one of these posts telling you how I paid down my student loan debt by a thousand bucks. So… as of a few days ago my student loan debt dropped from $85 thousand to $84 thousand. I knocked another thousand bucks off of my New Jersey Higher Education Student Assistance Authority debt to bring the total amount owed to that organization down to about $29 thousand.

Getting there. Slow and steady.

Down to $84 thousand...

Like I’ve been saying since I started this repayment plan in late December 2009/early January 2010 – this plan is strict and not the easiest to abide by. However, I’m sticking with it because I have to rid myself of this debt in order to function the way I want to function as a contributing member of the economy. Sending off about $3,000 each month to student loan companies is not fun and it’s not easy, but it has to be done so I can redirect that money to other uses (i.e. buying a home, a new car, investing more, etc.) sooner rather than later.

I try to lessen the impact of sending away so much money each month by being hyper-involved with my finances to the point where I check and recheck them at least twice each day. In fact, I budget out my expenses – including these bimonthly student loan payments – at least three months in advance (yes, my expenses are currently budgeted through the end of August 2010). I take a conservative stance on my budgeting because I know that unexpected expenses will likely pop up from time to time and I have to be able to handle them. I have my finances all organized in a multi-sheet Excel Workbook that I designed which tracks money in and money out all the way down to the penny.

It’s pretty cool, actually.

Another way that I try to lessen the blow of sending away this money is by trying to find ways to either generate more income or reduce expenses. Pretty basic stuff, right? Over the last few years, the three biggest monthly expenses that I’ve had are these student loan payments, monthly rent payments, and charitable donations. I’ve given you a bunch of updates on the student loan payments and I have to pay my rent every month (more on how housing affects the ability to repay student loans in my next student loan update), but I thought I’d spend a paragraph or two talking about how my student loan repayment schedule impacts my charitable donations.

Since I started this repayment plan, I’ve knocked back my charitable donations considerably. In fact, I selected four charitable organizations that I am going to focus on sending my donations to each year: my Church – St. Jerome’s Church in West Long Branch, the Sigma Pi Educational Foundation, Monmouth University’s Athletics Department (specifically, the basketball team), and the Monmouth County SPCA. I have different reasons for choosing each of these organizations. I donate to my Church because I believe in tithing to the extent that you can (I can’t really donate as much as I’d like because of my student loan debt). I donate to the Sigma Pi Educational Foundation because I believe in its mission and, as a board member, I am obligated to donate a certain amount every year. I donate to Monmouth University’s Athletics Department because I am impressed that the school managed to get that Multipurpose Activity Center built and I enjoy going to the home basketball games. And finally, I donate to the Monmouth County SPCA because that’s where I adopted one of my family’s pugs – Odie.

The difference between my donations on the repayment plan versus before I went on the repayment plan is that I used to send money to these (and other) charitable organizations whenever I had an extra $50 or $100 in my monthly budget. For this year, I’ve laid out certain dollar amount goals that I’d like to reach in terms of donating to each of these organizations. I’m going to knock them down one at a time (I’ve already made my budgeted donation for this year to one of these groups).

It’s all about budgeting and, in my case, it’s all about creating an extreme budget and sticking to it.

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. I currently owe $84 thousand, which breaks down to $29 thousand owed to the New Jersey Higher Education Student Assistance Authority and $55 thousand owed to the United States Department of Education. Follow my student loan repayment story on JerseySmarts.com.