How Long Are Student Loans – One of the best things I did after graduating from law school was to pay off my student loans as quickly as possible. This job gives me a lot of flexibility in the kind of money I have to earn.
Once my student loans are gone, I don’t need to do a job that earns a certain amount of money, allso some of it can go to a certain student loan company . And I can rest easy at night knowing I don’t have to keep paying for a piece of paper I earned years ago!
How Long Are Student Loans
Interestingly, even though I knew how many student loans I had paid off, I never really looked at what I had.
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I thought it might be an interesting trip back to my memory to see this information, so a few weeks ago I asked for my payment history from the life loan companies. member and reviewed.
Before diving in, it’s best to consider how I ended up with these student loans in the first place. I did at a law school that gave me a 50% scholarship – a pretty smart move in my book as my other options were much more expensive and would have left me in even more debt. My goal in going to law school was to keep costs at a level that I thought was manageable.
Although the scholarship helped reduce my study costs, I still had to pay a lot of money both in tuition and living expenses to get through those three years.
As you can see, I had 8 different loans with different amounts. $25,000 of those loans have an interest rate of 7.9%. The remainder has an interest rate of 6.8%. In total, my total law school debt is $86,500.
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I also have a $552 student loan left over from my college days that I didn’t pay off. Thus, my total student loans when I graduated from law school was $87,052.
That’s a pretty hefty student loan for a 26-year-old starting his first real job. Let’s start paying them off!
I graduated from law school in May 2013 and started my first job in September 2013 at a large law firm in the Midwest. Since I just graduated, I got a 6 month extension and didn’t have to pay my first student loan until December 2013.
I don’t really remember why I did it, but I happened to make some additional payments before my loans were officially due. Here’s what my 2013 student loan payments looked like:
Faq’s About Student Loans
What most people forget about student loans is that they continue to accrue interest while you are in school. So when I made my first student loan payment in August 2013, this is what it looked like:
Oh! The $750 payment doesn’t even touch any of the principal. I basically threw money away.
However, it’s stupid that I don’t understand the concept of capitalization. For those who don’t know what that is, basically, when your student loans are repaid, all the unpaid interest accrued during your school years is added to the principal and becomes your new loan unless you pay interest before capitalization. Remember the $750 payment I made on a loan? Here’s what that loan looks like when it’s capitalized:
Did you see what just happened? My $12,000 student loan suddenly turned into a $13,682 student loan! Interest was accrued during my three years of law school and when the loan came due, the unpaid interest was immediately added to the principal! This sucks because now I have to pay back the capitalization AND all the new interest accrued from there. And it wasn’t the only loan that was capitalized. I have three other loans that are capitalized, adding thousands of dollars to my principal.
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I consider 2014 as the first year I actually started trying to pay off my student loans. As a first year associate, I earn an annual salary of $110,000, so I have the income to cover my large loan. All I had to do was avoid the lawyer lifestyle trap that many of my colleagues have fallen into.
OH! I know I paid a lot of money on my loans, but I never really realized how much it was until I actually wrote it all down. Here’s a nifty chart that shows my student loan payments in 2014:
What surprised me was the ridiculously large payment I made in October. I had a sizable emergency fund at the time, so my best guess was that I decided I didn’t need it all. all that money in cash and throw some money into student loans.
You’re also probably wondering why my payments fluctuate and seem to vary so much each month. Much of this has to do with me randomly throwing in additional payments whenever I find my bankroll getting too big. I want to avoid what I call Wage Complacency, so that’s why you see sudden spikes and drops throughout the year.
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I got a raise in 2015 and my annual salary goes up to $115,000. Again, I made a decent income working here. Here’s what my 2015 payments look like:
Looks like 2015 got off to a great start. I pulled out a little more money from my emergency fund to start the year off, that’s why you see a really big spike in the first place. I’m not exactly sure why I did it, but my best guess is that I’ve heard a lot of Dave Ramsey’s words and am really motivated to reduce that loan balance even more. In any case, the money in my emergency fund doesn’t make a lot of money, while paying off my debt is a guaranteed 6.8% return.
As you can see, my payments still skyrocketed in 2015. I keep paying more as I have more money in my bank account.
Another big thing I did was use my three months’ salary to really throw a lot of money into my loans. I get paid every two weeks (like many others), so twice a year I’ll see three paychecks a month. Since I’m living well on just twice a month, every time the third paycheck comes in, I throw the entire third paycheck towards student loans.
How Long Does It Take To Pay Off Student Loans?
One mistake I made when paying off my student loans was not refinancing them the first year when I paid them off. If you’re like me and are planning on paying off your student loans quickly, there’s really no reason not to wait to refinance your student loans. Refinancing means you’ll lower your interest rates, which means you’ll pay less interest overall and get more money working for you.
I ended up having to refinance my student loan three times while I was paying off the loan (most people don’t realize how many times you can refinance your student loan). optional). Here are three companies that I have refinanced my student loans with:
If you’re not sure which company to refinance your loan with, a good option is to use a company that can search multiple companies to refinance your student loan for you at once. . These companies are essentially the same as Kayak or Priceline that refinance student loans. You can do a search and all the potential rates you can get will show you in one spot.
My advice is to refinance your student loans with SoFi first – that way you’ll have access to all the free events for SoFi members (remember you can still participate in these events even after paying off your SoFi loan).
Average Student Loan Debt For Law School In 2023
Then refinance your student loan again using Credible and choose the company that gives you the lowest interest rate. If you do this, you will get all the benefits of refinancing with SoFi once (i.e. will attend all SoFi events) and then you will have the lowest interest rates on your investments. your student loans (plus $200 for using Credible to refinance your student loans).
Or if you’re like me, you can basically go crazy and refinance your loans with every company. That’s pretty much what I did and while it wasn’t necessary it gave me access to a lot of signup bonuses.
If you’re confused about refinancing, be sure to check out my post on my student loan refinance experience where I cover exactly what I did when I refinanced my student loan. his member. You can read that post here: My Student Loan Refinancing Experience.
I started 2016 with another raise, this time $125,000 per year. Again, I had a large income to pay off these loans quickly, assuming I didn’t fall into the lawyer’s trap.
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So what the hell happened here? Why did I pay so little for the first 5 months and then suddenly dropped it
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