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JerseySmarts.com

A New Student Loan Servicer and New Frustrations

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Since early March I’ve been trying to write an entry on repaying both the car loan and the student loan. However, it’s not coming together the way I want it to so I’m putting that entry on the back burner until I can figure out exactly what it is that I’m trying to say. In the mean time, though, I’ve always thought that it helped me along in my repayment process to list on the blog how much money I still owed on my student loan. I’m going to try to incorporate that type of information onto the blog regarding my car payments, too.

$28 thousand left to go

Today, I owe about $28,000 on my student loan. A few months ago, the loan servicing for my remaining balance was transferred from the United States Department of Education (USED) to the Missouri Higher Education Loan Authority (MOHELA). I wasn’t asked about this transfer nor did I offer any implicit approval of the transfer and I’m not happy about it at all. The problem with these types of transfers is that when you devolve this type of process – a student loan borrower repaying a loan to the United States government – to a smaller, state-based agency, you lose some of the necessary perks of managing your account. For example, due to my massive monthly over-payments to the USED my required monthly repayment never really hit my account. I’d always overpay the amount that was due for each month and thus the automatic monthly payment was never processed.

With MOHELA, though, it doesn’t matter how much I pay each month – I’m getting hit with their stupid standard required payment anyway. Now in one respect that’s not a problem because I’m going to overpay the loan and retire the debt anyway. But in another respect this is a real nuisance and effectively screws up the wildly successful financial plan that I’ve been using to repay these loans. Some might say, “Well, just don’t let them automatically charge you for the monthly payment and pay on your own schedule.” And that would be the right answer except for the fact that by being in the automatic payment program, I receive a 0.25% interest rate discount on my loan. The same discount applied to when the USED serviced my student loan, but the difference in their program is that they don’t force the monthly payment if you overpay the amount of the monthly payment.

See how annoying this change is for an involved, aggressive borrower?

It would have been nice if the USED at least notified me that they were considering this change and gave me the opportunity to reject the change. I already fought my battles with the stupid quasi-state agencies when I dealt with the brain trust over at the New Jersey Higher Education Student Assistance Authority. Idiots.

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. Since I started repaying my student loans in July 2006, I’ve repaid a total of $91 thousand in principal to various lenders including the federal Perkins loan program, the New Jersey Higher Education Student Assistance Authority, and CitiBank. I currently owe $28 thousand in principal to the United States Department of Education’s federal Direct Loans program. This loan is serviced by the Missouri Higher Education Loan Authority. To date, I’ve repaid well over $30 thousand in interest to these lenders. Follow my student loan repayment story on JerseySmarts.com.

Another Thousand Knocked Off My Student Loan Debt – Down to $28 Thousand

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And… we’re back! Or I should say that “I’m back,” but whatever. After a little over a month and a half I’m glad to be back with another student loan reduction update. This time around, I’m glad to report that my student loan has dropped from $29 thousand to $28 thousand which, all things considered, isn’t so bad. Sure, I would have rather taken that $5 thousand down payment that I put on my new truck and that nearly $4 thousand that I just paid to the government and use it to reduce my student loan balance so I could happily report right now that my student loan debt broke beneath the $20 thousand barrier all the way down to $19 thousand, but what can you do, right?

Down to $28 thousand

However, like I’ve written on here in the past – I’m not annoyed that I had to spend all of that money on buying a new car and paying my taxes because the new car means that I’m finally riding around in a comfortable, safe vehicle and having to pay taxes means that I’m making more money overall. And no one can really be too upset when they’re safer, more comfortable, and making more money.

I do think that I’m in a somewhat “lost” category of taxpayers when it comes to my required payment, though. You see, I took out a ton of student loans to go to college, graduate school, and pay for living expenses. Well, in all of its wisdom the government created a student loan interest tax deduction so that if a taxpayer paid a bunch of money in student loan interest, then they could at least reduce the total amount of their taxable income to reflect the economic impact of having to pay that interest. In some ways, it’s very similar to the home mortgage interest tax deduction.

What’s interesting about my situation is that yes – I did earn a few more bucks in 2011 and thus had to pay more in taxes. Sure, no denying it at all and I’m not looking to deny it. However, unlike other folks who earned more money last year, I didn’t sock that money away into some account or invest it in the market. Nope. Instead, I gave all of that excess income to the government to pay down my student loans!

Do you get the ridiculous paradox that I’m caught in here?

I earned more money, gave that money to the government to pay down my student loans, but because I earned more money in the first place, the government wants more of my money in taxes (and that “more of my money” doesn’t exist… because I already gave it the government!). Do you see the absolutely outlandish situation that I’m caught in here?!

Anyway, since this is the only thing that has been on the student loan section of my mind for the last few weeks I thought I would share with you good people. And there you have it. I gave the government all of my excess income last year and – simply because I earned excess income and gave it to the government – the government has now come back and demanded even more of my money by this Tuesday. Unbelievable.

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. Since I started repaying my student loans in July 2006, I’ve repaid a total of $92 thousand in principal to various lenders including the federal Perkins loan program, the New Jersey Higher Education Student Assistance Authority, and CitiBank. I currently owe $28 thousand in principal to the United States Department of Education’s Direct Loans program. To date, I’ve repaid well over $30 thousand in interest to these lenders. Follow my student loan repayment story on JerseySmarts.com.

More Than A Student Loan Update – Ideas on Blog Writing After This Repayment Is Over

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By this point I’m sure you understand this already, but these updates are mostly my way to publicize that even the worst student loan debt can be repaid – and quickly. And I think my story proves that student loan debt can even be repaid when the borrower/former student is working at a nonprofit organization, donates approximately 10% of his income to charity each year, and has to find a way to afford to exist in an economy where prices inflate, but wages largely stagnate.

$29 thousand and dropping...

That’s been the general gist of these updates.

However, perhaps a more primary reason for me posting these regular updates is to keep myself on track with the very repayment plan that I’m talking about. Most studies show that when a person commits to completing a big, audacious goal (starting a company, losing weight, repaying a high amount of debt), they are usually much more successful if they publicize those goals and their on-going attempts, accomplishments, failures, and trials along the way.

That’s part of what I’m trying to do with these updates – keep myself honest and totally focused on the ultimate goal of living a debt-free life. In fact, once this aggressive repayment plan is completed (since purchasing the new car, the deadline has extended six months from Christmas 2012 to Summer 2013) I fully plan to continue to utilize JerseySmarts.com to hold myself accountable for other goals that I’m trying to achieve. For example, in the past I’ve noted on this blog that I managed to get myself type 2 diabetes from eating too much and not working out enough. I’ve achieved some remarkable success in reducing the impact of that disease in my daily life and I think I could certainly write more about that on the blog.

Related to the diabetes… many years before I used this blog to publicize how I’m destroying my student loan debt, I wrote about how I was losing a tremendous amount of weight. Well, like most dieters and gym rats my life pushed me in a direction where I couldn’t workout as much (thanks full-time job and awful, awful commute!). And – as you might imagine – I gained back a bunch of weight. No, I didn’t gain back all of the weight (thank God), but I did gain back a lot of it (I went from 385 down to 260 then back up to 365 and now I’m down at 325).

With my weight loss and healthy activities I think there’s clearly both a good story to tell and an opportunity to hold myself accountable for greater levels of success. What type of greater success might that be? Well, I see my total weight loss and healthy journey as more than an attempt to fit into a certain size pair of jeans or a certain t-shirt. I see the journey as a way to a more active lifestyle and as a way to be able to do more “fun” things that I really can’t do right now. One of the folks that I work with is always telling me how she and her husband go hiking and how New Jersey has a lot of great hiking trails. Hiking is something that I could certainly do right now, but I wouldn’t enjoy it because I’m just not in good enough shape. The same goes for bike riding. I would like to ride a bike around town or even to ride a bike up and down the boardwalk on early mornings. However, if I did that activity now I definitely wouldn’t enjoy it because I’d be huffing and puffing when I should be enjoying the activity.

And have you seen these tough mudders and other crazy types of obstacle course races? That looks like a whole lot of fun… just not a whole lot of fun yet for me. Plus, I feel like I can get some people to do those events with me (I’m referring to my roommates who read this blog as well as my cousin and brother who both read this blog).

And there’s more to it, too. I don’t often write about the fact that I stopped eating fast food back in 2002 and stopped drinking soda around the same time (though I never really drank a lot of soda). In fact, there was a point in high school (late 1990’s) where I stopped drinking soda for over a year! Over the last 5 – 6 years I’ve done a lot of reading and some minor research on healthy foods, primal/paleo eating, and organic food versus non-organic food. I’d like to share a lot of that information and my thoughts on it on JerseySmarts.com, too.

Don’t think that the future of these accountability updates will deviate too far from the financial world. Once Summer 2013 has come and gone and I’m student loan free for the first time since 1999, I’ll have quite a bit to write about as I build up a significant reserve fund, housing fund, and continue to work to pay off this new car loan – and ultimately a mortgage for a house. In other words, these periodic updates aren’t going away after Summer 2013, but they might change a bit.

At this point, I guess it’s worth mentioning that my student loan debt has dropped again. This time it fell from $32 thousand outstanding down to $29 thousand outstanding. This represents the achievement of two major goals in one, fell swoop. First, I’ve now repaid over $91 thousand in student loan principal (and about $30 thousand in student loan interest). Second, I broke through the $30 thousand barrier! Believe it or not, the last time I only owed this much in student loans was after the first semester of my Junior year of college (that would be way back at the end of December 2001!).

In other words (working backwards), so far I’ve successfully repaid the academic and housing/living student loan debt that I incurred in (1) graduate school, (2) in the year before I entered graduate school when I was sort of in between schools, (3) during my senior year of college, and (4) during the second half of my junior year of college.

Pretty amazing, huh?

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. Since I started repaying my student loans in July 2006, I’ve repaid a total of $91 thousand in principal to various lenders including the federal Perkins loan program, the New Jersey Higher Education Student Assistance Authority, and CitiBank. I currently owe $29 thousand in principal to the United States Department of Education’s Direct Loans program. To date, I’ve repaid well over $30 thousand in interest to these lenders. Follow my student loan repayment story on JerseySmarts.com.

Should Achieve Two Separate Student Loan Repayment Milestones Any Day Now

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Any day now I should be achieving two separate student loan milestones. As you might imagine from the opening of this entry – yes, I’ve reduced my student loan debt once again. This time around my total outstanding debt has dropped another $2 thousand to go from $34 thousand down to $32 thousand. Again, considering that I began my repayment during the summer of 2006, I think that this much of a drop is pretty damn impressive – but I would think that about my own accomplishment, right? 🙂

Big news coming soon!

The real stories here, though, are the two big repayment milestones that I’m closing in on: repaying a total of $90 thousand in principal and breaking through the $30 thousand threshold. Both of these milestones are incredibly close to being a reality. For example, after my next thousand dollar payment I’ll have repaid $90 thousand in total principal and over $30 thousand in interest. Shortly thereafter (or possibly at the same time), I’ll break through the $30 thousand threshold and my student loan debt will be sitting in the $20 thousands for the first time since the end of my Sophomore year in college (that would be way back at the end of the Spring 2001 semester).

Pretty amazing.

Much like my last few student loan entries – there’s no major words of wisdom for me to impart right now. Like I wrote a few months ago – I’ve reached this point because I put the brain that the good Lord gave me to work in figuring out a solution to my student loan debt versus crying about how much debt I accumulated while in school.

Like Morgan Freeman says in the Shawshank Redemption – either you get busy living or you get busy dying. In this case, I could have gotten busy bitching about my debt or gotten busy working my ass off so I could repay it. After a few years of making the minimum payments, at the beginning of 2010 I chose to get busy working my tail off so I could repay the debt. And I’m clearly in a better financial place because of that decision.

If you’ve got a ton of student loan debt, then you need to make the decision that works best for you and don’t wait. Hopefully, my experience proves that getting busy repaying your student loan debt is the best choice.

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. Since I started repaying my student loans in July 2006, I’ve repaid a total of $89 thousand in principal to various lenders including the federal Perkins loan program, the New Jersey Higher Education Student Assistance Authority, and CitiBank. I currently owe $32 thousand in principal to the United States Department of Education’s Direct Loans program – a loan which started repayment in July 2006 with a balance of $59 thousand. To date, I’ve repaid well over $30 thousand in interest to these lenders. Follow my student loan repayment story on JerseySmarts.com.

Summing Up 2011 in Terms of Student Loan Repayments

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Some people with seemingly insurmountable student loan debt spent a good portion of 2011 crying about their debt burden and whining that their dream job wasn’t waiting for them when they graduated. They are in the same “nowhere land” that they were when 2011 started. Other people saddled with insane amounts of student loan debt occupied areas around the nation and accomplished absolutely nothing of significance in the process unless you count spending taxpayer dollars on excessive cleanup and security measures as significant. I opted to spend 2011 focusing on dramatically reducing my remaining student loan debt to a manageable level that would perfectly position me to eliminate the debt in 2012.

Where the student loan burdened crybabies and occupiers failed, I succeeded.

When 2011 began I had $54,385.85 in total student loan debt remaining payable to the United States Department of Education. When 2011 ended I had $34,911.14 in total student loan debt remaining (still payable to the USED). The reason why I share these numbers is because I want people out there with incredible amounts of student loan debt to know that you can defeat your debt and you can do it without the dream job or the six figure salary. You can defeat the debt by working hard and giving up many of the luxuries of life until you can afford them.

I’m not going to recount my point of view on these topics because I’ve done so over and over again in 2011 (and prior years). However, what I thought would be helpful is if I put together a brief list of links to other student loan entries from 2011 that focus on certain topics related to repaying student loan debt.

Personally, I think that the last entry linked above is a really good one. If you have a few minutes and you haven’t read that one yet, then I recommend giving it a go. Here are some other interesting tidbits regarding the repayment of my student loans in 2011…

  • Daily Interest. When 2011 began I was accruing $6.71 every day in interest alone. Today, my student loans accrue $4.30 in interest on a daily basis. It’s not great, but I’ll take a $2.41 reduction in interest accruing everyday! Over the course of a year, that’s $879.65 saved in interest alone. Still think that it’s not worth it to drastically overpay your monthly bills?
  • Principal Repaid. In 2011, I repaid a total of $19,474.71 in principal.
  • Interest Repaid. In 2011, I paid a total of $2,133.68 in interest. Also, because the tax code is written to reward lazy people with a redistribution of wealth from those of us who work their asses off (i.e. people who aren’t rich, but still work like crazy to earn enough money to repay their debts), I won’t be able to count the full $2,133.68 as a tax deduction. Why? Simple – I worked too hard in 2011 and earned too much money so my eligibility to count the $2,133.68 as a tax deduction is nullified. Think about that – I worked extra hard to earn extra money that I did NOT keep or stick into an account somewhere. Instead, sent that money to the government to repay this loan and that same government is going to penalize me for that hard work in repaying their loan by not allowing me to count the $2,133.68 as a tax deduction. Now tell me how this government is working in the best interests of the hardworking middle class again???

Look folks – either you get busy repaying your debts or you get busy occupying public space and/or crying and whining about something that only you can really change. Getting busy repaying your debts works – my experience proves that time and time again. Bitching and moaning about how your debt is someone else’s problem isn’t going to get you anywhere – the public displays of childishness proved that throughout the latter half of 2011.

Here’s to pushing harder than ever to have my student loans totally repaid by the end of 2012!