If you have read my About Me section, you know I graduated college with a hefty amount of debt.
$68,000 to be exact.
In this post, I will tell you my college backstory as well how I am working to destroy my student loan debt now (and hopefully not for too much longer).
Furthermore, I plan to update this post at least once a month, so you can follow me on my path towards freedom and learn some of my tricks & tips along the way.
Before I tell you about my student loan debt and how I accumulated such a large balance, I wanted to give you a little insight into my background and how I got to where I am today.
My parents moved from China to the United States a few years before I was born. They decided to come over to pursue better career opportunities, as they felt as if they couldn't advance in China.
While this move ultimately paid off, it wasn't as easy as they expected. The whole moving process cost more than expected, and the transition into the culture here was challenging. Having two children soon after immigrating didn't help either.
Because of this, they weren't able to make/save as much as they had hoped. Though they were able to provide a comfortable life for my sister and I, they let us know early on in high school that they wouldn't be able to help us out much with college.
So what did I do?
And worked some more.
Throughout high school I always had at least one job, and often more. I did everything from tutoring to landscaping to delivering pizza to painting fire hydrants. I was always trying to get my hands on some extra work to make a few bucks.
I was able to save a decent amount of money from high school part-time jobs, but I knew I was far off from being able to afford my dream school - Caltech.
As I continued to research the costs of college, I almost made the decision to attend community college for a few years to save some money. Though this wasn't what I really wanted to do, I knew it would be a smart move. In the end, I decided to apply to Caltech, along with some other schools, and make a decision once I knew my options.
After waiting what seemed to be like a few years, the college's responses finally started to come in. I had gotten into some and rejected from others, but it wasn't until I saw an orange packet that I knew my decision.
It was the Caltech packet.
I knew I had good news coming my way when I saw a thick envelope instead of a simple letter. To be sure, I opened it up and confirmed my suspicion. It was at that moment that I decided I was going to be attending Caltech for 4 years - even if it didn't make financial sense for me.
Yeah maybe community college would save me some money, but it wouldn't give me the real "college experience" that I had dreamed of for so long.
That same day I accepted Caltech's offer.
Before heading to Pasadena to start my journey, I knew I had some research to do.
The amount I had saved up from high school would only put a golf ball sized dent in the 18-wheeler I had coming my way. Caltech wasn't the most expensive school, but it was a private school and would cost me much more than some saved up money from those part time jobs.
The first thing I did was apply for scholarship and grants. This was all free money, so might as well go for it! Every day when I wasn't working or doing school work, I was applying for scholarships. I don't know exactly how many I applied for, but I estimate that it was around 300.
Luckily for me, my hard work paid off. I was able to secure about $10,000 in private scholarship and grant money. Additionally, Caltech offered my a decent scholarship due to my academic performance in high school.
Even with all of this, however, I still had a long way to go.
Next step: student loans.
After reading about student loans, I found out that my best option was to take out federal student loans. After filling out the FAFSA, I was offered both subsidized and unsubsidized federal student loans. Though it would have been nice to only accept the subsidized loans (as the government pays interest while students are in college and during periods of deferment), I had to take out both.
Unfortunately, I still didn't have enough money to cover the cost of attendance of Caltech. I had just around $5,000 left for my first year.
Though I was hoping to avoid them at all costs, I also had to take out private student loans.
I had read horror stories about people dealing with private student loan lenders and the collection agencies. Also, I knew private student loans typically had higher interest rates and less favorable terms.
Luckily for me, my parents agreed to cosign on the loans to help me get lower interest rates. Since they had established credit histories, having them agree to take responsibility let me save a few percentage points. In addition, I never really had the bad experience with my lender as many people have reported.
During college, I was sure to make at least the interest payments on my unsubsidized federal student loans and my private student loans. If I didn't do this, the interest would increase my principal balance, and each subsequent interest charge would be high.
I highly recommend making at least interest payments on your student loan while in school, if possible. This is one of the single best ways to save money over the life of your loan, but far too many people do not do it.
So with my scholarships and grants, federal student loans, and private student loans - combined with constantly working throughout college - I was able to pay for my college education. Despite the financial stress that I was put under both in and after college, I wouldn't do a single thing differently if I could go back.
How I'm Currently Destroying My Debt
After graduating from college, I had around $68,000 in student loan debt. Ouch.
Though this was a hefty number, I knew that if I followed my general strategy of researching and planning, I could get it repaid.
So that's what I did.
In the short break I had between graduating and starting my job, I spent a lot of time planning on how I would repay my debt.
The first thing that I thought would be a great decision for me was refinancing my student loans. I had a good job and income, and thought I would be a great candidate. Also, I didn't plan on taking advantage of student loan forgiveness or an income-based repayment plan, so I wasn't worried about losing federal benefits by refinancing with a private lender.
One thing I didn't first pick up on, however, was that many lenders' eligibility requirements were also based on creditworthiness. Though I did have a credit card in college, and always paid it off in full, I didn't really use it enough to establish much of a credit history.
So I shifted to Plan B: spend about a year building up my credit, while making at least the minimum payments on my loans, then apply for refinancing.
And that's what I did. Over the next year I started using credit cards more, watched my utilization ratio, and always made payments on-time. During this time I made full payments on all of my student loans, plus a little extra when possible.
A year later I was approved for refinancing, and cut my average interest rate from about 7.0% to 3.2%. Additionally, I was able to consolidate all of my loans into one, more manageable loan.
This leads me to where I am today. I am still consistently making my payments and putting any extra money towards my debt when possible.
It was been a little challenging to balance deciding to put extra money towards my debt or for extra surprises for my daughter, my after a recent promotion, it has become a little more realistic.
As of this writing, I currently have about $41,500 in student loan debt left to repay. Though this seems like a lot, I am pretty ecstatic that I am about 1/3 of the way there!
Moving forward, I plan to keep chipping away at my debt to the best of my ability. Also, I plan on refinancing my loan again if I am offered a lower rate.
Stay tuned for updates, and as always, if you ever have any questions or need any unprofessional advice, feel free to reach out to me!
Current Amount of Student Loan Debt:
November 2016 - $41,500
January 2017 - $39,900
March 2017 - $38,350