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Moving Right Along – Another Thousand Bucks Melts Off My Student Loan Debt

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We’re all used to this routine by now, right? It’s been about two weeks since my last student loan announcement, so that must mean that it’s time to announce another thousand dollar drop in my student loan debt. That’s right – my student loan debt is now down to $78 thousand. More importantly, however, the New Jersey Higher Education Student Assistance Authority (NJHESAA) portion of my student loan debt is now down in the $23 thousand range.

At $78 thousand...and counting

The drop in my NJHESAA student loan debt is important to note because this particular debt is the one that I’ve focused on in this repayment plan. I think that once I get rid of this particular portion of the student loan debt, I’ll be in a much better position, overall. These days, I’m sending about $2,500 in to the NJHESAA folks each month. I would rather, of course, have that money remaining in my bank account each month!

Actually, I’ll probably just direct some of those funds towards repaying my United States Department of Education (USDOE) student loan. But I’ll cross that bridge when I get to it…

According to the spreadsheet that I prepared to monitor, track, and project my NJHESAA student loan repayment, it looks like I’ll have this loan paid off in less than a year. My original goal was to have it repaid by April 1, 2011 and I think that goal is still attainable if a few things go in my direction financially. However, I take an ultraconservative stance when I update my spreadsheet so at this point, it looks like I’ll have this loan repaid slightly after April 1, 2011.

And I never factor into my projections the fact that I’ve made some money in the stock market. I’ve been thinking a lot lately about selling out of some stocks (like Ford and Bank of America). If I decide to sell out of those stocks any time soon, I’ll more than likely direct my earnings on those sales directly to repaying this student loan debt. Trust me, if I decide to do that there will be a celebration on this blog since it’ll chop the remaining balance of this particular loan down to a very easily manageable size!

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. I currently owe $78 thousand, which breaks down to $23 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.

This Repayment Plan is Tough, But Worth the Strain

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Anyone that has been following my student loan repayment story here on JerseySmarts.com has to know that this plan is pretty tough to stay on. There are a variety of interests that pull my money from my pocket and they range in value and necessity from buying new clothes (a necessity at times) to making donations to causes that I care about (a necessity for personal and tax reasons) to trying to get a bite to eat at a restaurant every once in a while (not a necessity at all). However, I refrain from spending money foolishly because I have to repay this student loan debt.

Down to $79 thousand

And when I stick to the plan, I get to make announcements like this one. Today, my student loan debt has dropped from $80 thousand to $79 thousand. I hope that by now, you’ve become accustomed to the thousand dollar drop every other week. I hope to keep that going through the end of the calendar year. And, frankly, with the addition of my adjunct professor paycheck starting in about 6 weeks, I expect to be able to jump over a grand here and there and make announcements that I’m two thousand dollars lower than the previous update.

But that will come in time.

I’ve taken a look at my finances through the end of November and it’s pretty interesting. I’m projecting to bring my student loan debt down by another $10 thousand or so before December 31st. That’s not bad. And I plan to accomplish that by beginning another goal that I have – to make this the fiscal year (July 1, 2010 – June 30, 2011) where I achieve my highest level of support for the Foundation where I serve as a Trustee. Granted, that may amount to only a few thousand dollars worth of donations over the course of now through next June 30th, but it’s a goal that I want to achieve.

And when I think about how – once the student loans are paid off – I’ll be able to use some of this extra money that I’m currently diverting towards my student loans and put it towards other causes, that’s pretty exciting. I’d like to sponsor scholarships for undergraduate and graduate student that are struggling to get their degree. I’ll be able to do that once these student loans are gone. I want to invest more in the market. I’ll be able to do that, too, once these student loans go away. There are limitless possibilities as to what I can achieve once this albatross is gone from around my neck.

Right now, though, I’m celebrating another thousand bucks biting the dust!

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. I currently owe $79 thousand, which breaks down to $24 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.

This Is Completely Unacceptable – The $555,000 Student Loan Debt

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Who knows more about repaying student loans in New Jersey than I do? Seriously, by the time I’m done repaying my student loan debt I’ll have the knowledge and know-how to write a book about how to do it right. So, from up here on my ego-confident perch as the man when it comes to student loans in New Jersey, I felt compelled to comment on a story that came through my inbox many months ago. This story has to do with a woman with a student loan debt of nearly $555,000.

Repeat: $555,000!

WOW!!! That’s incredible… and completely unacceptable.

When I saw the headline on Yahoo! News that read, “The $555,000 Student-Loan Burden,” I had to read more. And what I found was the story of Dr. Michelle Bisutti. If you want to read her story directly as reported by Yahoo! News and the Wall Street Journal, you can click here and take it in for yourself. Here are the parts of the story that struck me and stuck in my head:

When Michelle Bisutti…finished medical school in 2003, her student-loan debt amounted to roughly $250,000. Since then, it has ballooned to $555,000.

It is the result of her deferring loan payments while she completed her residency, default charges and relentlessly compounding interest rates. Among the charges: a single $53,870 fee for when her loan was turned over to a collection agency.

WHAT?! A $54 thousand fee for turning the loan over to a collection agency?! Okay, look. I understand that lenders need to be repaid. Heck, I work for a statewide loan fund and when my borrowers don’t repay their loans, my professional life sucks. So, I completely understand the need for people to repay in good faith. But a $54 thousand fee for turning a debt over to a collection agency? Get out of here! That’s ridiculous and should be reversed without question.

How dare someone charge that type of fee? For comparison’s sake, if an interest rate was that outlandish it would be called usurious and the lender could possibly be taken to court and penalized. A $54 thousand fee… good grief!

There is an estimated $730 billion in outstanding federal and private student-loan debt…and only 40% of that debt is actively being repaid. The rest is in default, or in deferment, which means that payments and interest are halted, or in “forbearance,” which means payments are halted while interest accrues.

Ummm… can anyone say “bubble ready to burst?” When you combine the high unemployment rate with the increasing student loan debt burden – well, it’s not a good thought. Only 40% of student loans are actively in repayment? Oh boy…

Dr. Bisutti says she loves her work, but regrets taking out so many student loans. She admits that she made mistakes in missing payments, deferring her loans and not being completely thorough with some of the paperwork, but was surprised at how quickly the debt spiraled.

As a guy whose student loan debt story was also spread out all over the national media, I’m glad that this paragraph was included in the story. One of the missing pieces of my story in USA Today was that I pretty much knew what I was getting into with respect to my student loan debt. It appears that Dr. Bisutti knows how she wound up in the position that she’s currently in and I can tell you from experience that this puts her a few steps ahead of other student loan borrowers that are falling behind on their payments.

While in school, her loans racked up interest with variable rates ranging from 3% to 11%.

Eleven percent?! Are you kidding me?! Now we are dealing with usurious interest rates if you ask me…

She maxed out on federal loans, borrowing $152,000 over four years, and sought private loans from Sallie Mae to help make up the difference. She also took out two loans from Wells Fargo & Co. for $20,000 each. Each had a $2,000 origination fee. The total amount she borrowed at the time: $250,000.

In case any of you are wondering how a person borrows $250,000 in student loans – there’s your answer. Quite frankly, I know folks that have over $200,000 in student loan debt. In fact, I’d be one of those people if I decided to stay in Graduate School until I received a Doctorate. And while I do anticipate eventually going back and obtaining a doctoral degree, I want to eliminate or dramatically reduce the remainder of my student loan debt ($80 thousand as of this writing) before I take that step.

In 2005, the bill for the Wells Fargo loans came due. Representatives from the bank called her father, Michael Bisutti, every day for two months demanding payment. Mr. Bisutti, who had co-signed on the loans, finally decided to cover the $550 monthly payments for a year.

Ugh. What a horrible resolution to this particular loan’s status. One thing that always stuck in my mind when I was an undergraduate (not a graduate student) was that my Mother co-signed for my student loans. I’m not quite sure what benefit, if any, I received from having her co-sign, though I know that she made a quarterly interest payment on the loans while I was in school. There was no way that I was going to let any of my student loan debt fall back on my Mom and Dad’s shoulders, so as soon as I had the opportunity to consolidate my $121 thousand in loans I did so.

Again, I didn’t receive a lower interest rate because I had a co-signer with an excellent credit score, so other than providing the student loan companies with an additional repayment source, I’m not sure what the benefit of a co-signer is for today’s undergraduates.

She recently entered a rehabilitation agreement on her defaulted federal loans, which now carry an additional $31,942 collection cost. She makes monthly payments on those loans — now $209,399 — for $990 a month, with only $100 of it going toward her original balance. The entire balance of her federal loans will be paid off in 351 months. Dr. Bisutti will be 70 years old.

Well, at least the good Doctor found herself a repayment plan. But with only $100 of each payment going towards the original balance, she’s going nowhere fast. However, if I can make any recommendation to Dr. Bisutti it would be to overpay when possible and as much as possible.

The debt load keeps her up at night. Her damaged credit has prevented her from buying a home or a new car. She says she and her boyfriend of three years have put off marriage and having children because of the debt.

I readily admit that there was a time when my student loans kept me up at night. Those days are pushing further and further away, but they’re still close enough where I remember the gut-wrenching feeling of not believing that there was an easy way out of the student loan debt situation. Of course, I’ve found my way and I’m beating the crap out of my student loan debt, but there are hundreds, thousand, and even tens of thousands of student loan borrowers out there who are in way over their heads. I sympathize with their situations and hope for the best for each of them (and their lenders, who should be repaid).

Back in June 2006 when I was plastered on the front page of USA Today the one thing I remember most from that whirlwind experience was that people tried to project their personal situations on my situation. I can’t tell you how many internet message boards I read that said I should have gone into the military because, “Back in 1946 that’s what I did and the government paid for my education!” Or how many times I read crap like, “Joe should have gotten a job while in college and not eaten so much!” (I had two jobs in college and there were MANY comments about my weight on the internet message boards because, well, people are really, really dumb).

That said, I dare not project my personal situation on the good Doctor chronicled in this story. Like I wrote above – I’ve also been kept awake at night because of my student loan debt. I know what that suffocation feels like and I’m sorry to hear that anyone else has to go through it. I know what it’s like to not be able to buy a home because you can’t begin to put away the proper down payment. I know what it’s like to not be able to purchase a brand new car for the same reasons. And I know all too well what it’s like to push off new or advancing relationships because the thoughts of your student loan debt consume you.

So, if this blog entry reaches Dr. Bisutti I hope that she is doing well and making progress in repaying her debt burden. Good luck, Dr. Bisutti!

When in Doubt – Write About Student Loan Debt Dropping

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It’s been nearly a week since my last update on JerseySmarts.com and the reason for that is because, well, I didn’t have anything compelling to write about! Also, I’ve been swamped at the office which is actually turning out to be a good thing since I’m getting a lot of work completed before I head off to Boston for a few days at the end of the month. All of that aside, when I’m in doubt about what to write for JerseySmarts.com, I just check where my student loan debt sits because, usually, there is a good story to tell.

And there is another good story to tell today.

We're at $80 thousand and counting

As of a few days ago, my total outstanding student loan debt reached $80 thousand. Like I’ve said over and over again in my recent entries on student loan debt, this is a big accomplishment! What makes me even happier is that while I still owe the United States Department of Education some $55 thousand, I’ve reduced my New Jersey Higher Education Student Assistance Authority (NJHESAA) debt down to about $25 thousand. For perspective’s sake, I started 2010 owing NJHESAA about $42 thousand.

So I’m just chopping away at them piece by piece. And, according to my projections, I could eliminate this debt early in 2011. Of course, that depends on a lot of different things falling into place as well as me not being able to generate any additional income (and thus be able to repay more of this loan) before 2010 ends.

What I am most pleased with regarding my NJHESAA debt is that this year I’ve only paid about $1,200 in interest costs. I’m not sure what I paid to NJHESAA in interest last year, but I’m sure it was multiple thousands of dollars. Now, I’m not sure how the rest of my calendar year is going to shake out or the exact dates that my future planned payments are going to be processed, but there is a chance that I’ll only pay this company another $600 in interest before 2010 is over. Capping the interest paid on this loan to less than $2 thousand in a single year is monumental. Huge!

Anyway, if you’re going out today or this week, then be sure to have a drink for me to help celebrate this accomplishment! It’s funny… when I graduated from Rutgers with six figures of student loan debt, I thought that the situation was unmanageable and too out of control for me to ever be in control. However, here we are today at yet another milestone and not only do I feel in control, but I feel in more and more control with everyday that passes. 🙂

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. I currently owe $80 thousand, which breaks down to $25 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 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.