How I’m Paying My Student Loans While in College

Lauren Davidson is a Junior at the University of Pennsylvania. She is majoring in Finance and is working to set herself up for success in repaying her student loan debt after graduation.

Yes, I hear you right now. You are screaming over there because I said those two words – “student loans.” Okay, okay, calm down. I will use the word as sparingly as I can as I tell you my story.

Just like you, I used to be afraid of those two words and when anyone would bring the topic up I would just head for the door and that was the end of it. I knew at some point I needed to get a grip and stop being afraid of the word.

I am a college student at the University of Pennsylvania. I already have student loan debt and, unfortunately, way more of it than most of my peers. I used to be ashamed of it, but now I use it as a stepping stone to help others and propel myself forward.

To be fully open, I already owe $32,000 in student loan debt and I still am just beginning my Junior year. Ugh! It stinks, it really does. But, I have owned the mistakes I made when borrowing and now I want to share with you just how I am paying down my student loans and what I plan to do in the future to pave my pathway to success.

I hope you find this information useful and you are able to apply it to your own situation, if you do have student loans or student loan debt. Ready to learn more about me and my plans? Okay, great!

I Make Interest Only Payments While in School

Did you know you can choose to make interest payments while you are in school or you can opt out and allow the interest to accrue while you go to school?

It is true and this is one of the toughest decisions that I had to face, but I knew which option was the best once I sat down and evaluated them.

I chose to make my interest payments while I am in school. Why? Because by making interest payments while in school, I am preventing my (already huge) amount of debt from growing more than it has to.

Okay, you are probably not even sure what I am talking about right now, especially if this is your first time in college. If you do NOT make your interest payments while in school, it will accrue and be added to your principal balance once you graduate.

Therefore, if you owe, for example, $50,000 and you accrued a total interest amount of $6,000, your total loan balance will be $56,000 and this is the amount that the interest grows on. In short, if you don’t pay your accrued interest, it will be added to your total balance, and your next interest charge will be even higher.

I Apply ALL of My Money to My Student Loans

The next thing that I do is I apply ALL of my money to my student loans. Any money that I receive, no matter the reason, it goes straight to my student loan provider.

You may be wondering just how I live right now, right? I actually found a cheap apartment that is pretty far off-campus compared to my other options. I do have to pay rent, but it isn’t nearly as much as some of my peers.

Another tactic I use is that whenever I have a birthday or gift-giving holiday approaching, I ask for the money anyone was going to give me to be sent to pay off my student loans. I apply any bonuses from work, my tax returns, and all forms of additional money to my student loans.

You may be thinking, well, you are not even out of college yet and you do not have to make payments yet. Yes, this is true, but when you pay your student loans off as I am, you do not end up owing as much and you do not get charged interest on the original amount, but the new amount that is generated after you make payments.

I Participate in the Work Study Program to Reduce the Amount I Need to Borrow

I do participate in the work study program and this means I do not have to depend on student loans any more. I can borrow the bare minimum needed and continue to work on paying them off.

The work-study program allows me to be self-sufficient and it provides me with a job where I can earn a wage to help support myself while in school. I do work at the school, specifically in the library, but I love it. I meet new students, have fun, and it does not even feel like work.

Have you considered the work study program? If not, you definitely should!

I Have a Ridiculously Tight Budget That I Stick To

Okay, I mentioned that I still live at home and I do. I am fortunate enough not to have to pay rent, but I do have to pay for my food and half of the other bills in the home. Bummer, yes, but hey, at least I am not out there trying to do it on my own. I would really be up a creek without a paddle then!

I have a budget I stick to and it includes only spending $50 per week on groceries and then about $100 in the split bill payments. The rest of the money goes straight to my loans. I may keep a few bucks here and there, but I do not keep much money for myself. Yes, it is difficult, but I know it will pay off in the end.

I Am Building Credit to Set Myself Up for Success in the Future

Many of my college buddies are afraid to use a credit card. They immediately associate credit cards with debt, as silly as it sounds. The truth is, credit cards are a great way to set yourself up for financial success in the future. As long as you make payments on time, are smart with your credit utilization, and don’t take out too many credit cards in a short period of time, you can start building up your credit score.

I personally am especially in building my credit so I can refinance my student loans after graduation—assuming I can land a decent paying job! Because I don’t plan on going into a public service field (that would make me eligible for forgiveness) or am too worried about the income-driven repayment plans, I can save tons of money by refinancing with a private lender. After I refinance, I will receive a lower interest rate and can even change the repayment length of my loan to something that fits my personal situation.

Have You Thought about Your Plans for the Future?

I know my finances are a bit tight right now, but I would rather it be this way than to head out into the real world and live paycheck-to-paycheck. If you work hard at it, you can pay off your student loan debt just like I am working to do.

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