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Why One Woman Refinanced Over $80,000 in Federal Student Loans in 2021

Why One Woman Refinanced Over $80,000 in Federal Student Loans in 2021

Conquer your student debt. Refinance now.

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Meagan Morris was an undergrad at a time when it was so easy to get student loans, and no one fully explained to her what it would be like to pay back all that debt—a mix of federal student loans and private loans—once she graduated from journalism school. Eventually, she amassed over $100,000 in student loan debt.

When she began working, her payments ate more than half her take-home pay. So, this year, at the age of 39 and with $89,000 still left to go, she refinanced it all with Earnest to lock in a lower interest rate and pay her loans back faster.

Since March of last year, federal student loans have been in an automatic forbearance period with zero interest thanks to the CARES Act, which Congress passed to offer student loan relief from the Coronavirus pandemic. So far, President Biden has not made plans to extend forbearance beyond Aug. 31, 2022.

Meagan used the break to focus on paying down other debts and waited to see if election season chatter about forgiving student debt would work in her favor. However, she got tired of waiting and decided it was time to prioritize paying off her loans. So, she started researching refinancing and found Earnest.

We sat down with Meagan to understand why she chose to refinance her federal student loans, and what she wishes you knew about forgiveness vs. refinancing.

Q: What college did you attend and why did you choose that school?

I grew up in Nebraska and the University of Nebraska in Lincoln is one of our primary state schools, so I went there kind of by default. Later, I went to grad school at the City University of New York for a master’s in journalism.

Q: How did you choose a major?

I think I had a vague idea that I wanted to be a doctor, but once I started taking some of the science and math courses, I quickly realized that it wasn’t my strong suit.

My dad had worked in radio while I was growing up and I’ve always been pretty media conscious, reading a lot of magazines and always consuming newspapers and television shows and things, so it seemed like a natural fit for me. Then I chose the business degree because I wanted to have that base knowledge and studying abroad was a requirement for that degree, and that really spoke to me.

Q: Where did you study abroad?

I did one summer in the United Kingdom at Oxford University, doing economics courses, and then I spent the second semester of my junior year in Granada, Spain, doing a semester of Spanish language and culture.
Oxford was cool, but it wasn’t necessarily the full study abroad experience because I went with a large group of students from my business school.. In Spain, we had a lot more independence. I lived with a host family and got that immersion experience.

Q: Were you worried about the costs? How did you feel about borrowing that much money?

No, I wasn’t.

I’ve always worked a lot of jobs, but I was not really educated on student loans. My parents never went to a traditional college, so they didn’t have any comprehension of what student loans really were, and the education from my school was really lacking.

I think my approach to it was always like, “Oh yeah, I’ll have this great job when I graduate and it’ll all get paid,” like it was a problem for future Meagan to deal with. It was a time when student loans were super-easy to get. When I was studying abroad, I would just email the financial aid director at my school and say, “I need more money.” She would draw up loan documents and send them to me, and then the money would be deposited into my bank account. I did not have the foresight to realize the gravity of what I was doing at the time.

Q: When you graduated, did you struggle with student loan payments?

Oh, absolutely.

Especially after undergrad, it was probably over half my take-home pay. I had no choice but to get a second job on top of the full-time job I was working. I ended up working probably 60 to 80 hours a week basically to afford my life and the mess I had gotten myself into.

It was a very stressful experience. I just didn’t know how I was going to get out of it. Sometimes I had to choose between making credit card payments or paying loans or eating. I think a couple of times, I had to take a temporary forbearance on student loans so I could afford to live. I had some late payments.

Q: When did you first start thinking about refinancing?

I started to really consider it before COVID, but then the CARES Act kicked in.

Q: What did you do when the federal government put a pause on payments as a part of Coronavirus aid?

When the CARES Act forbearance kicked in, that allowed me to get way ahead on some of the other debts I had, like my car payment and credit cards and some other miscellaneous debts. During that time, I was able to pay all that debt off. So now all I have is my student loans and my mortgage.

Q: Why did you refinance your student loans during the CARES payment pause?

I was going to leave some of my loans as federal loans and refinance just some of the higher interest private student loans, in case the government decided to forgive federal loans. But some of my interest rates were like 6.8%—it’s a lot of money, and a high interest rate.

I decided to go ahead and refinance that because I think the chances of having forgiveness at this point are pretty low. I could be wrong, but I think they’re probably pretty close to zero, considering that it hasn’t really been discussed seriously since before the 2020 election. I don’t foresee it coming back up—I think the most the government would probably do is keep 0% interest, but I didn’t want to risk losing out on locking in a lower interest rate. I’ve cut my interest rates more than in half.

Q: Were you ever worried that you could miss out on student loan forgiveness by refinancing?

I’m not really too concerned about it now. I thought it was a lot more likely before the election. So, naturally, I wanted to wait, in case at least something would be forgiven. However, now my confidence that it will happen is near zero. Of course I will kick myself if I end up being wrong about it. But, ultimately, I did take out those loans and I’m going to repay them. While I would like to have them forgiven, it is my responsibility at the end of the day.

Q: What kind of research did you do to help you make the decision to refinance?

My credit score is pretty excellent, so I thought this would be a good time to look into it. I didn’t want to do it at the last minute when payments resume on federal loans. I started researching different private lenders and reading Reddit threads and reviews I found. Earnest offered the lowest rate and the process was very smooth on my end. So it was a no brainer, for me, to go with Earnest.

Q: How much has your monthly payment changed?

It’s probably honestly going to be about $750 more per month than I was paying before the CARES Act kicked in. However, it’s not a difficult payment for me to make, and the repayment plan is much shorter—7 years, though I plan to pay it off much faster than that. This gives me a light at the end of the tunnel. It’s more motivating to me to really focus on paying off those loans faster than to be looking at, still, the 15 or 20 years that were estimated before I refinanced.

Q: How do you plan to celebrate once you pay off your loans?

I will probably take a trip of some sort, probably something that I’ve always wanted to do. I really want to go to Argentina and Brazil, so maybe something like that.
Seeing the light at the end of the tunnel is really motivating to me because I can see an end date, it’s not just an arbitrary date sometime in the future. And then I will be completely debt-free, in the not-too-distant future except for a mortgage.

Q: How do you budget to pay off your loans more quickly?

I use a lot of budgeting tools and software that help me visualize how I’m doing. They keep me on track financially, so I know exactly what I have for the month and then how much debt I have and how fast I can expect to pay that off at the current rate. YNAB—You Need A Budget—is basically my holy grail. I rely on that for everything. I also use a debt visualization software called, which helps you decide how you want to pay off your debt.

Q: If there’s anything you wish people knew about refinancing, what would it be?

There’s still very much a lack of education around student loans. I think there needs to be some legislation around it to help provide more education for people because entry and exit counseling is pretty much a joke.

I also want people to know there are a lot of scams out there. Anything some company says they can do for you—like getting you a lower payment—you can do that yourself if you put in the effort. I just wish people wouldn’t fall for those things.

I want people to take more of an active role in their own finances, rather than assuming a debt consolidation company would do it for you.

Q: What do you wish your younger self had known?

Gosh, there’s so much.

Be realistic about what you can afford and where your financial situation is currently, and don’t try to create a new lifestyle just because you’re in an adult, 40-hour-a-week job. Try to live like a college student and focus more on paying those student loans as much as possible, and work as much as possible.
But also look for education wherever you can find it, and ask for advice from people you can relate to.

Q: What do you wish you could share with people currently struggling with student loans?

It was out of sight, out of mind for a really long time, and that really set me back on my financial goals. If I can save someone from paying student debt when they’re nearly 40, that would be awesome.

I saw a lot of stories when I was looking for inspiration to pay off debt. Someone said they paid off $100,000 in 7 months, and I found that really demotivating. It doesn’t seem like something people can relate to, and it was always very demoralizing to read stories like that.

I like seeing real-life stories of people who are struggling. It’s a very real struggle, and people aren’t alone.

How to Decide if Refinancing is Right for You

Like Meagan, many student loan holders are faced with the uncertainty of what to do after the government restarts student loan payments. Those who are counting on public service loan forgiveness have seen some movement on the issue, but many other student loan holders are still unsure about their future.
When it comes to refinancing, there are some benefits to consider. Refinancing your student loans at a lower interest rate could help you pay off your principal balance faster, saving thousands of dollars on interest payments over time. Meagan decided to refinance with higher monthly payments, a much lower interest rate, and a shorter repayment timeline to reach debt freedom faster.
However, once you refinance federal student loans you will lose access to all federal benefits, including any pandemic aid, deferment or future forgiveness programs.

Learn more about refinancing with Earnest.

Refinancing with Earnest

Earnest has some of the lowest rates and you can check your rate in 2 minutes without any credit impact. Earnest allows you to set your exact payoff date to get your ideal monthly payment. You can pick from 4 payment options, and you will never pay any fees, not even late fees.

As you research whether refinancing is right for you, take into account how your student loan repayment will change and whether the loan terms work for your needs. And just remember, you’re not alone—and it’s never too late to start improving your financial literacy.

Check your rate in 2 minutes
Check your eligibility for Earnest student loan refinance
Visit the U.S. Department of Education to get the latest updates for federal student loan borrowers.


Megan’s experience with Earnest may not be typical of all Earnest refinancing clients.
The interview was edited for brevity and clarity

Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.

Conquer your student debt. Refinance now.

Get My Rate
Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.