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New Information on My Long-Term Student Loan Repayment Plan

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Being a regular reader of this blog obligates you to put up with my ranting and raving about student loans every once in a while. And, for clarity’s sake, my rants are different than the reports where I celebrate my student loan repayments (usually twice each month). Anyway, this entry is not one of those celebratory post (look for one of them next month). Instead, it appears that I’m not in as good of a long-term situation as I had originally planned…

Unfortunately, it appears that the second half of my student loan repayment plan may not occur as I had originally anticipated. Even though I was told by the United States Department of Education (USDOE) that I qualified for the Public Service Loan Forgiveness Program and that I was already enrolled in it due to the excessive amount of student loan debt that I was carrying, it turns out that information wasn’t entirely correct. Yes, I still qualify for the forgiveness program, but no – I won’t be taking it up as a repayment option.

Why, you ask?

Simple. I called the USDOE about a month ago to get an update on all of the details on this program and how I could possibly use it to my repayment advantage. As it turns out, the first person that I e-mailed back and forth with (linked above) was incorrect when she implied that I was already in the forgiveness program, which forgives the balance of your debt after 10 years of consecutive repayments assuming that you meet certain parameters. Right now I’m 4 years into my repayment, so if the first person that I talked to was correct with her information, then I would be nearly halfway done with my $55 thousand USDOE debt. Well, she was wrong.

Apparently the forgiveness program requires you to complete a simple application to enroll and part of the approval process includes wrapping up all of your debt into one big loan with the USDOE. There is no way I would do this. I currently have a private loan with about $30 thousand outstanding at 7.33% interest. If I can stick my repayment plan (and I’ve done so well so far), then I can have the private loan repaid within 12 months. If I consolidated with the USDOE now, then I would wind up with a blended interest rate of above 5.5% and I would have to carry that for the life of my student loan repayments. Currently, my interest rate with the USDOE is 4.25%.

In other words, if I consolidated with the USDOE and stuck to my current repayment plan, I’d wind up increasing my interest rate by over a point. What’s the sense in that?

So… I’m not enrolling in the Public Service Loan Forgiveness Program. And now I’ll have to reformulate the second half of my repayment plan for my student loans. At this point, my reformulated plan is to keep all things the same and just continue the automatic monthly payments out of my checking account straight to the USDOE. But, as I continue to demolish the private loan debt we’ll see if I come up with another repayment plan.

The “Next Big Goal” Has Been Accomplished – Time to Define a New Goal

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You may remember way back to the beginning of March when I defined what the “next big goal” of my student loan repayment plan would be. For those of you that might have forgotten or who don’t want to take the moment to click back on the link above, the goal was to break the $30 thousand barrier with my New Jersey Higher Education Student Assistance Authority (NJHESAA) student loan.

The Next Big Goal Achieved!

Today, I can happily announce that this goal has been achieved! 🙂 But let’s not spend too much time celebrating and being happy. No, in fact I want to take this chance to define what my next goal will be with this repayment (some of you might be able to guess this goal). With today’s announcement that my NJHESAA student loan debt is down to $30 thousand, that leaves a total of $85 thousand of total student loan debt that I have left outstanding to repay. The next goal is to break the $80 thousand barrier in terms of total outstanding student loan debt.

But wait! I’m going to add a twist to this goal. According to my projections, I should reach this goal by August 1, 2010. Well, I want to accelerate that a little bit. I’m going to create an even stricter time limit on reaching the next goal – I want to reach it by July 15, 2010. In the world of paychecks and balancing personal budgets, reducing a projection by two weeks is a monster goal to achieve.

Let’s see if I can get it done.

In the mean time, everyone out there in JerseySmarts.com land should feel free to raise a glass to fighting for one’s financial freedom from student loan debt. It can be done and I intend to do it!

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. I currently owe $85 thousand, which breaks down to $30 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.

A Double Drop on the Student Loans This Time Around

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Today is a good day – and not just because the spring weather feels good and it’s a nice day outside. No, in fact today is a good day because my student loan debt has dropped from $88 thousand to $86 thousand. That’s not a typo either, folks. After getting my federal tax return at the beginning of this month, I decided to apply a large portion of it towards paying down my New Jersey Higher Education Student Assistance Authority (NJHESAA) student loan.

The result? A $2,000 check going from my checking account to NJHESAA’s coffers and the reduction of my NJHESAA student loan debt from about $33 thousand down to about $31 thousand. Since I’ve now reached approximately $31 thousand in my NJHESAA student loan debt, I can now officially say that in 2010 I’ve repaid about $10 thousand of this loan…so far.

A Double Drop This Time

That’s a significant reduction – very significant. For a quick example of how significant this $10 thousand reduction has been in real terms consider this: As of January 1, 2010, I was paying $8.23 per day in interest alone on this loan. Over the course of a year, that’s $3,003.95 in interest expenses. Gross. Today, I am accruing interest at $6.40 per day or $2,336 per year. Annually, the difference in projected interest costs is $677.95. That’s a lot of money – and I’m only less than four months into my hardcore repayment strategy for the NJHESAA loan! So how much have I paid in interest thus far this year? $769.43. My goal is to keep that amount as low as possible.

Before I wrap this gloat session up, I feel compelled to add that this whole repayment thing isn’t easy. It is fun to write these entries, but repaying so much of this loan so quickly is not easy.

Remember, I created a very strong, very strict repayment plan because I want to get rid of the burden that these student loans cause me both today and tomorrow (and that “tomorrow” part is critical). An essential part of that repayment plan is focusing on wants versus needs…and it’s not easy or enjoyable to make that decision of what I want versus what I need. It’s not easy denying myself what I want to do with my paychecks versus what I really know that I need to do with those paychecks. I really want to take the approximately $2,750 that I spend on student loans each month and put a few hundred into my savings account and a few hundred into my brokerage account and then spend the rest of the money living the type of lavish lifestyle that you see on television. I’d love to do that – I’d love to go out and buy new clothes every few weeks instead of once or twice per year. I’d love to give my Mom back the small Honda Civic that I’ve been “borrowing” from her for almost two years and, instead, go out and buy a brand new hybrid SUV that would give me the roomy drive that I want and the gas mileage that I need. And I would love to travel more (like my recent trip to Nashville).

But I know that I don’t need to do those things. In fact, even more than knowing that I don’t need to do these things, I know enough about money and daily compounding interest to know that engaging in my wanted activities listed above instead of paying off my student loan debt would be condemning my future to a life of bloated student loan payments. Screw that! I’ll make the sacrifices today to make sure that tomorrow is absolutely awesome, thank you very much!

Oh, and now would be a good time to remind everyone of the “next” big repayment goal which I set for myself during the first week of March. Go ahead, click over and take a read.

I’m getting there…

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. I currently owe $86 thousand, which breaks down to $31 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.

How Much Have I Paid in Student Loans Since January 1st?

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Here we go again… It was almost three weeks ago (18 days to be exact) when I announced that my student loan debt dropped from $90 thousand to $89 thousand. Well, another great announcement – I’m now down to $88 thousand (yippee!). Oh, and notice the new student loan debt image that I made to slap on to these posts from now on (double yippee!).

My student loan debt drops again!

And so here we are again with another “my student loan debt recently dropped” entry on my blog. I like these entries because each new one that I post on the blog is one step closer that I come to financial freedom. Why use the term financial freedom? That’s easy – I’m essentially bound by these student loans until they become manageable. Let me give you some brief numbers to show you why…

Today is the 98th day of 2010. To date in 2010, I’ve spent about $9,800 on my student loan debt (by an odd coincidence, this example works perfectly). In others words, for each day in 2010 I’ve paid $100 in student loan debt… which has totaled nearly $10,000 since January 1st. Consider that for a moment. I’ll wait.

Done?

That’s pretty disgusting, don’t you think? Sure, I overpay my student loans so that I can eliminate them quicker, but imagine if your bank account was depleted by $100 per day to pay for something that you can’t tangibly see, touch, or feel. Believe me on this – it would drive you crazy.

But my days are not filled dwelling on the annoyance of student loan debt. Nope. Instead, if I’m not actively earning more funds at my day job, through my website company, or via my teaching gigs, then I’m trying to find new ways to earn funds to continue paying down these student loans. The bad news is that it is a physically and mentally exhausting practice. The good news is that the student loan debt is (slowly) melting away. The better news is that once the student loan debt is manageable, I’ll be able to restructure my budget to begin achieving other financial goals. The best news is that once the student loans are paid off completely, I should be in a situation where a good deal of money is rolling in due to this structure that I’ve set up for myself.

It’s all in the planning, you know? Let’s hope for another one of these entries very soon!

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. I currently owe $88 thousand, which breaks down to $33 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.

A Happy Announcement on a Quiet Sunday

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What a wonderful series of days we’ve had down here at the Jersey Shore, huh? Thursday was beautiful, Friday was absolutely gorgeous, and yesterday – the first day of Spring – was just about as perfect a day as you can ask for with the weather. It is incredible to think that only two or three weeks ago we were stuck indoors because of snowstorm after snowstorm piling multiple feet of snow all around the state. Absolutely amazing.

I’ve been running around like a crazy person since last weekend. In fact, when I look back at my schedule, I’m amazed at how fast the week flew away. I spent last Sunday at my Grandmother’s husband’s wake, last Monday at home in Tinton Falls where I researched and wrote a twelve page paper before heading to the class that I’m taking at night, Tuesday and Wednesday catching up on a variety of work building up at my office, Thursday and Friday at the New Jersey Charter Schools Association’s annual conference (which was AWESOME – stay tuned for more posts about the conference), and yesterday up in New Brunswick having dinner and good times with my coworkers.

I would be remiss if I didn’t briefly mention an odd coincidence during dinner last night. I was in the middle of telling a story to my coworkers when I noticed a familiar face out of the corner of my eye. Turns out that my doctor was at the same bar/restaurant – Old Man Rafferty’s – that my coworkers and I were at! And what’s even weirder is that of the six of us who went out for dinner, two of us use this doctor as our general practitioner! We didn’t draw the doctor’s attention because I was eating fettuccine alfredo and my coworker was drinking a beer – both of which our doctor told us we shouldn’t be doing (we each have different health issues – long story). But it was definitely weird to see our doctor hanging out with his buddies when we were all about 40 minutes from our home area.

Maybe it was God trying to send us both a message about doing what our doctor tells us to do!

Anyway, my happy announcement today is that my latest student loan payment check has been processed by the people at the New Jersey Higher Education Student Assistance Authority. Thus, my overall student loan debt has fallen from $90 thousand to $89 thousand. If you ask me, that’s a pretty happy announcement – especially since it means that I’m getting closer to the next milestone in my student loan repayment plan.

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. I currently owe $89 thousand, which breaks down to $34 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.