This article is by Gerard Dawson, a freelance writer and a high school teacher.
Many adults pay off their student loans 17 years after college.
This length of time, 17 years, is the average payback time for those who do not graduate.
Two decades of payments, and no degree. Of course, the average payback time for those who do graduate is longer, often 20+ years.
But is there another way?
We spoke with three young professionals who prove that the answer is yes.
While many millennials put the minimum on auto-pay and accept a years-long plan, others pay off debt quickly. Some even finish before their 30th birthday.
This story features three young professionals who have paid off debt at an impressive rate due to a mixture of planning, sacrifice, and a healthy mindset. They are:
- Anthony Debonis PhD, a 32-year-old school administrator
- Jim Gallagher, a 29 year-old supply chain manager for a multinational company
- Mike Santo, a 27-year-old IT professional at a large PR firm
Their stories teach valuable lessons about the dos and don’ts of student debt repayment. They offer inspiration for those who feel overwhelmed.
Loans Are Necessary
For Debonis, loans were part of a well thought-out career plan. He knew that he needed several degrees to compete in his chosen field of education.
“[Loans] were a necessary evil in order to achieve the academic standard I had set for myself. I felt that having a doctoral degree would put me above other candidates,” Debonis said.
Similarly, student debt was a no-brainer for Gallagher. But, in looking back, he feels he jumped in with little knowledge of the student loan process.
“In hindsight, I had no idea what I was doing. It’s just not something that was explained to me well,” Gallagher said.
Santo spent two years at community college. Then, the bill was on him when he transferred to a nearby state school. He took both private and government loans to cover the tab.
So far, these stories appear relatively normal. Three millennials borrowing thousands of dollars necessary to pay their tuition. How did they succeed? First, they had a goal.
Have a Vision
A vague desire to pay off debt is insufficient. Debonis, Gallagher and Santo each created clear visions for becoming debt-free. For Gallagher and Santo, the vision was to be debt-free by age 30.
Debonis set his sights even closer. His plan was to “continue to increase the loan payment until it is paid off within five years.”
While a goal is important, it won’t get you the whole way. Each of the grads also developed a tactical plan to put chunks of cash towards debt.
Plan and Execute
The strategies here differ, showing that debt repayment can match your personality.
Working several jobs after college, Santo saved extra cash every few months. He made use of these savings windfalls wisely.
“I would try to double the minimum monthly payment and then every six months or year I would throw something like $3,000 to $9,000 at it,” Santo said.
Gallagher took a lifestyle-based approach, which he still lives by.
“The strategy I took… is really just living below my means.”
“The strategy I took, and that I still employ to this day on other things, is really just living below my means.”
This meant finding “big wins” to free up cash.
“I had a roommate when I didn’t need to. As I received raises and bonuses, I put all the incremental money to paying off my student debt,” Gallagher said.
Debonis relied on planning and financial reviews to forecast repayment.
“I mapped out my payments throughout the five-year process, while also noting when other loans, such as a car payment or an interest-free credit card, expire so the amount used for that can then be shifted to the student loans, “ Debonis said.
Each of these guys paid off their loans fast.
Fast: Santo paid off two years of tuition at the age of 27
Faster: Gallagher paid off four years of tuition by age 27.
Fastest: And Debonis paid off two degrees before 30: his Bachelor’s by 25 and his masters by 29.
Living below your means is an effective way to pay down debt fast.
Gallagher once considered a new car purchase when his old vehicle was drivable. He ultimately took the savings for the car and put it towards debt.
Santo identified a satisfaction that comes with sacrifice.
“Sometimes, you go out to the bar and spend $100. It’s so much better to say, Wow I spent $5,000 or $10,000 paying off my loans, ” Santo said.
All three mentioned balance. This, Gallagher says, transcends loans as a pillar of financial health:
“It’s important for your mental and physical well-being to take time out and do things that you like and not feel guilty about spending a dollar.”
A Comfortable Nuisance
Ultimately, Debonis, Gallagher, and Santo demonstrate that tactics plus mindset are an effective combination. Self-education about personal finance goes a long way, too.
“Understand the loans and do your research! With income-based repayment, as well as loan forgiveness options, you can make the loan a comfortable nuisance,” Debonis suggested.
Refinancing can also help lower interest and allow you to restructure the length of your loan in order to make it more manageable.
And while laser-focus determination sounds attractive, it’s important to view finances in the context of your life.
“There needs to be a balance. Otherwise, you’re going to burn yourself out and you’re going to get bitter about it. It’s going to prevent you from being happy in your personal life and being successful in your career,” Gallagher said.