How I’m Paying off my Student Loans Using Mobile Apps
As I write this article, we are 25 days into the partial government shutdown.
While the shutdown does affect many federal agencies, it doesn’t affect the Department of Education’s fund disbursement nor payment collection.
So good news, borrowers *sarcasm* — we gotta keep coughing it up, even if you’re furloughed!
I made some very smart *more sarcasm* decisions back in 2012 when I was a financially-illiterate graduate school drop-out. I kept deferring my loans because I wasn’t making enough money, then I deferred them some more until I got old enough to understand that even though I didn’t have to pay them, I’d still have to pay even more later on due to the high-AF interest rates.
Well, guess what? It is “later on” now. And while my actual loan isn’t as high as I’ve seen in other cases, it isn’t low for my income bracket either. That’s mainly due to the interest that accumulated like a pile of bat guano in a deep, dark cave during the time when I wasn’t making very much in the way of stable income nor payments years back.
The first thing I did after my grace period was over and I stopped continually deferring my loans was to get on an income-driven repayment plan. Based on your taxable income and other factors, the servicer will determine how much you need to pay per month.
After that, I needed to start paying in order to reduce the interest. Unfortunately, payments go to your interest first and your principal balance second (that was the first lesson I learned).
As the aforementioned financially-ignorant person I once was, I read tons of articles on paying off student loans but there was an issue.
Many articles assume that people have traditional 9–5 jobs, financial stability, and therefore, options like refinancing. They also somehow surmise that you have no other issues going on in your life related to medical costs, dependent children, being a caregiver to the elderly in your family, the cost of an unexpected death, plus anything else that has to do with being a living, breathing human navigating capitalism.
The reality is that people like me, the so-called millennials, are increasingly becoming freelancers in the “gig economy,” where paychecks and seasons can be inconsistent and budgeting can seem an unlikely endeavor on top of whatever else you have going on in life.
But even so, I found a millennial solution to my millennial problem.
Mobile apps like Digit and ChangED have helped me save and pay off my student loans. While ChangED is specifically for student debt, Digit is an all-purpose saver that can be used for anything from saving for a trip to paying off your credit cards. Both are FDIC-insured. And, I’m not getting paid for this (I wish I was)! These apps have helped me over the years and I want to share my debt-paying strategy with you.
Digit
Okay, this one’s my favorite. It’s the biggest no-brainer in the world when it comes to saving.
You connect your bank account to the app and based on your earning and spending habits, Digit will pull small monetary amounts automatically and save them to the default “rainy day” fund, which is shown on the app’s interface.
What I love about Digit is that you can create multiple goals — I made one called “Student Loans” of course — and the app adds amounts from your bank account and places them into each of your various goals.
To withdraw any amount of your savings is easy. Digit will place your chosen amount back into your linked bank account and you can do what you will from there.
You can also pause the automatic money pulls if you find you run into a change in your finances.
It’s free for the first 100 days and just $2.99 after, which I’ve found to be well worth it due to its sheer simplicity and, most importantly, automation.
Through Digit, I’ve been able to send more than 1.5x the amount of my calculated monthly student loan payments, which is great to offset that interest!
ChangED
ChangEd was developed to pay off student loans and utilizes your main spending account.
You connect your account as well as input your loan servicer info into the app (Great Lakes, Navient, MOHELA, etc). So yeah, that means you have to physically log on to your servicer’s website to find the info that you were avoiding looking at all this time.
Like Digit, ChangED will analyze your spending but it will round up any “loose change” when you make purchases. For example, if you bought those overhyped, Western-dupes-for-K-beauty (lol I’m mean) Glossier Cloud Paints and Boy Brow for $30.45, ChangED will round up those 45 cents to make it 55 cents — basically, it’s $1.00-.45 =.55.
Whatever the difference is from $1, that’s what it’s rounding it to and that’s the amount that will be transferred to your ChangED account once the roundups reach $5.
Once your overall ChangED account reaches $100 of roundups, it’ll send that payment directly to your loan.
Does that make sense? I’m math challenged. If not, you can always go to their FAQ and learn more and tell me how wrong I am.
It charges you $1/month to do the budgeting work you obviously don’t wanna do on your own (hi)!
While this article is geared toward folks paying off student loans, it can be a strategy to pay anything off, whether you’re a freelancer or not. This comes from my personal experience and may not be right for everyone, but it is an option to make saving for large expenses easier.
If you have other personal finance apps that you enjoy, let me know in the comments below. I’m always looking for easy, lazy-girl ways to save.
Thanks for reading! If this article helped you in any way, I would love it if you “clapped” and shared it widely.
