Can Millennials “Hack” their own Student Loan Debt?
Rhiannon Cook, NLC Pittsburgh
If you need any convincing that student loan debt is a BFD, want historical context of the policy, or an understanding of how the current political environment is affecting it, please read parts one, two or three of this six part series. In this fourth installment we will explore what solutions to the student debt problem look like from a real life, on the ground, individual perspective. For me and everyone I know who has student loan debt, it is a personal and psychological burden that weighs heavily upon us, so let’s get real about what solutions we as individuals have.
I want to start by saying that I am one of the lucky ones. I graduated from a top four-year, out-of-state, liberal arts college with less than $35,000 in student loan debt (Hooray!). I didn’t have to work full time during school, have any financial help from my family, nor did I have to sell one of my kidneys. I was a recipient of a lot of scholarships because I was lucky and because I worked my ass off during every step of my education. It’s important to me to acknowledge that MANY people are burdened with a great deal more debt than me, and I feel very #blessed for having received an amazing education without having to be six figures in the red. But can I also acknowledge that starting out adult life $35K in the hole is still a really awful thing? Yes — it could totally be worse, but it still is a massive personal burden that I spend a great deal of energy and time thinking about how to get rid of. For many years it was easier to not think about it at all, make the minimum payments, and get on with my life. It was about a year ago that I really stopped ostriching, as the kids call it, and began thinking about how my life could look if I wasn’t tied to this debt. This first required me to learn about my debt and the system that owned it, in order to get a firm grasp on where I stood.
Know where you stand… or sit… or are lying down
When I was 17-years-old, signing my FAFSA, and heading off to college for the first time, I had no idea what I was doing. “Sign here? Done. Check this box? No problem. I can take Greek as a foreign language? Sign me up! I will definitely use that.” Six years after graduation, I still had no idea what the hell was going on — it was literally all Greek to me (note: Sadly, I had to drop Greek as it was mostly kids who’d gone to Greek school their entire lives and there was a whole new alphabet to learn on day one). Throughout most of my 20’s, I thought I was doing well because I’d never missed a payment. It wasn’t until last year that I really started to take stock of where I stood and was shocked by how much money I still owed:
These were hard numbers for me to look at. I understand the impulse many of us have to be disheartened, stick our heads back in the sand, and resign ourselves to having a hefty portion of our paychecks never really reaching our bank accounts. But then I got pissed off and I began to think about what a difference an extra $400 every month would make in my life. Oh, the places I could go! Instead of being discouraged, as was my first instinct, I felt compelled to try to take control of my debt. Investing the time to figure out these numbers forced me to look directly at this mass of debt and the many ways it impacts my life. Just like taking off a Band-aid, it’s easier to just rip it off rather than stress about the anticipation, so here’s what you need to do:
1. Find out your current balances, interest rates, and what kind of loans you have from your loan providers.
2. If you have the means, make sure you at very least pay the minimum balance due every month on time. Automate these payments so you never miss them, and you can possibly qualify for an interest-rate reduction.
3. Use this to calculator to get your average interest rate
4. Use this tool to calculate your estimated payoff date
Congrats! You’ve taken control.
Now what? One woman’s search for truth
There is a considerable amount of energy that goes into learning about your debt, but that’s only step one. My ultimate goal was to pay it off more quickly; so I could start saving for things like a home, kids, or contributing to a retirement plan. With this goal in mind, I started asking everyone I knew if they had any viable ideas about how I could pay off my student loans more efficiently. The majority of people in my life had responses that fell into one of the two below categories:
1. “Don’t worry about it, you don’t even have that much debt.”
2. “I don’t want to talk about it because this subject makes me ill.”
Not completely satisfied with the above, I did what any good millennial would do — I asked Google. That’s when I found out that there are a lot of people, organizations, and businesses who have attempted to answer this question to varying degrees of success. Hoping to make my research more methodical than anecdotal, I reviewed every organic search result (I skipped the ads) in the first five pages of Google and catalogued and organized all the solutions offered so that no one ever has to do that again (unless that brings you joy, then do you). This process was like drinking through a firehose. There is so much information out there, but when you actually process that information you find that most of the results are presenting non-helpful “solutions” that are masquerading as tangible options. Before we get to the actual solutions, I want to touch on these which I call the “Nolutions.”
The Time Machine “Nolutions”
The first category of answers you will come across in your search to pay off student loans involve borrowing less money in the first place. That means going to a less expensive school, paying interest while in college, applying for more scholarships, working more in school, and my favorite: “Why are you just thinking about this now that you’re almost 30?” All the above are nolutions because I lack the ability to time travel. If I could, I would go back and buy Apple stock, not lecture my 17-year-old self on the importance of fiscal responsibility. Proffering advice like this to someone who has already accumulated their debt is the equivalent of telling someone who’s asking for help after they’ve fallen into a deep hole that they really shouldn’t have fallen into that hole in the first place. Not helpful. Moving on.
The Not-A-Solution “Nolutions”
I love search engines because those algorithms probably know me better than most of my close friends. Google knows when I ask “how do I make avocado toast?” to give me a recipe for some damn avocado toast (s/o millennials!). So why, when I ask “how can I pay off my student loans more quickly?”, am I given a lot of resources on forbearance and deferment? Both are incredibly important options for people who are having trouble making payments and working to avoid default, but they are not an answer for how to pay off loans more quickly. Instead, they make the process longer and more expensive. Next.
The Privilege “Nolutions”
Actual suggestions made by people who claimed to have paid off their student debt include: being born rich, marrying someone who is rich, making more money, or banking on getting some sort of cash windfall. I want to mention these nolutions because they are pervasive in our culture, but are not realistic for most of us. If you win the lottery or marry a Bezos, you should 100% pay off those loans. Additionally, if you can work a second or third job, ask for a raise, or negotiate a higher salary at another job, do that! But for most people, these are suggestions of privilege that don’t necessarily feel helpful.
Martyrdom “Nolutions”
Because it’s the internet you can always count on finding some outrageous things, and I couldn’t not share these other ways people claimed to have paid off their student loans:
· Sleeping in your car instead of a hotel when traveling (Maybe, but this also seems like a great way to get murdered)
· This girl couch surfed for a year (Technically that’s being homeless)
· Eating less/ skipping meals (Hard pass)
· Going without health or collision car insurance (The opposite of responsibility?)
· This guy lived in his van (Good for him)
I respect the hell out of some of these people’s hustle, but there is an unhealthy amount of competitive sacrifice among the student loan generation to see who can pay their loans off the quickest by any means necessary. I got a college degree so that I wouldn’t have to live in a van and skip meals. To me these are nolutions because I am not personally willing to endanger my health or security to pay down my loans more quickly, nor would I advise anyone else to.
Iterations of all of the above nolutions comprised approximately 70% of my Google search results. Out of respect for my audience and in the quest to find real solutions, I am not going to mention any of these again. They are not answers to our question — so what is?
The complex web of real solutions
This research project of mine ended up being like panning for gold, requiring me to sift through a lot of BS to get some good nuggets. The good news is that there are a lot of great solutions that are actionable and accessible. In general, the five items below can benefit most people currently working to better manage their student loan debt:
1. Know where you stand (see above).
2. Automate your online payments so they are never missed, and to potentially qualify for an interest-rate reduction.
3. See if you qualify for a tax deduction or credit for the interest you’ve paid on your loans.
4. Before putting any extra money towards paying down your debt, be sure to have an emergency fund first.
5. Contact your loan providers to change your due dates to work better for you.
The bad news is that beyond the above, the solutions are highly complex and situational. Because there are so many kinds of student loan debt and factors involved, what is going to help me pay off my debt more quickly might not be the best option for someone else. Beyond the five general guidelines above, there are no magic bullets or “hacks” that I could find that are going to be appropriate for an audience who could have anywhere between $10K in federal loans to $100K+ in private loans. As a result, I created the following decision tree to help navigate this complicated process, and the general first steps we as individuals with student loan debt can take to potentially shave years off our student loan sentences. Of course, the following is only meant to provide general guidance. I am just a person on the internet, and you should always consult an expert before making any financial decisions.
I didn’t think that trying to pay off my student loans more quickly would be easy, but I also didn’t think it would be this hard. It’s taken me years to work up the courage to become proactive about my loans, months of educating myself on how they work, and hours of additional research parsing out the real solutions from the nolutions. Then once you finally get to the real solutions, you find yourself deep in a maze. Obviously, this decision tree is highly complex and intimidating, but navigating our student loan debt isn’t a simple process — it is convoluted and intricate. The emotional, psychological, and mental labor that goes into figuring all of this out is immense. I am not asking for my education to be free or my loans to be forgiven. I’m asking why do we expect people to go to these lengths to pay back a debt and then blame them when they don’t start earlier? This is overwhelming, and complicated, and painful, so I understand the mindset of individuals who are stalling or avoiding it all together. This is hard work, but there is hope for those of us already in the red and it’s worth us figuring it out as soon as we can. My hope is that I’ve created a resource that others can use to begin to create their own road map to rid themselves of their student loan debt.
Rhiannon Cook is a senior media strategist and buyer with Chemistry who works to elevate and improve advertising and messaging efforts for her clients who are doing good in their communities. She is currently the New Leaders Council Pittsburgh chapter Co-director and was a 2015 NLC-Pgh Fellow.
The views expressed in this piece are those of the author, and not necessarily the views of The New Leader or New Leaders Council. The information and analysis presented are for educational purposes only, and It is not intended to provide legal advice or opinions.
