How Privilege Helped Me Pay Off All My Student Loan Debt in Three Years
Financially successful young adults love to write articles about how financially successful they are, with headlines that sound like “How I Bought a House at 21,” “Why Living in Manhattan on a $50,000 Salary Is Easy” or “This Is How I Paid Off All My Student Loan Debt in Just One Year.”
In that type of piece, however, the writer tends to ignore the assistance they received along the way to achieve their financial goals.
So, what follows is a step-by-step explanation of how I myself paid back approximately $20,000 in federal student loans. It highlights not just my hard work and smart decision-making but also the circumstances and government programs and policies that enabled me to be debt-free in roughly three years.
- While I was accepted to my dream college, I chose to go to the school that gave me the most scholarship money and financial aid. (Which I’ve written about previously.)
- My parents paid whatever was left over from my tuition bill after scholarships, financial aid, and loans. One of the ways they saved money for my college education was through tax-advantaged 529 college savings accounts. Congress established 529 plans in 1996, and they are administered by all 50 states and the District of Columbia.
- At the end of each college semester, I paid off the interest that had accrued on my loans. Doing this nearly eliminated compound interest and ultimately reduced the amount I had to pay after I graduated. I knew to do this because of an online financial literacy course my university offered that students could take to improve their chances of getting better campus housing.
- During college, I worked up to 20 hours per week doing a variety of campus jobs, including work-study positions that are paid, in part, by the federal government.
- The COVID-19 pandemic rudely interrupted my senior year, as I graduated in 2020. Because of the pandemic, former President Donald Trump put a pause on requiring borrowers to make federal student loan payments and set associated interest rates at 0%. President Joe Biden continued this policy until fall 2023.
- I began a full-time, salaried job shortly after graduating. Previously, I had a summer internship at the same company through a program sponsored by my university. This program connected me to an alumnus of my college who was a senior leader at the company and who encouraged me to apply for the internship.
- Although I had a job, I worked the first year from my parents’ house (where I didn’t have to pay rent) because my company’s offices were closed due to the pandemic. I started to pay off my student loans, even though I wasn’t required to yet because of the payment pause.
- When Biden was campaigning for president, he said he would waive $10,000 in federal student loan debt for most borrowers. After he was elected president, I had less than $10,000 in student debt remaining. So I stopped making payments, and instead put that money into savings.
- That turned out to be a rather prudent move. The Supreme Court in 2023 struck down Biden’s plan to cancel $10,000 in student loan debt for many borrowers, including me. So before borrowers were required to begin making payments again last October, I took the money I had put into savings and paid off the remainder of my debt.
Yes, I did work hard to pay off all of my student loan debt shortly after graduating. But hard work alone clearly isn’t why I’m debt-free today.
While I was able to live rent-free and work entirely remotely for a year, those aren’t advantages available to everybody. And even though my student debt wasn’t forgiven, there still were multiple government programs that made college more affordable for me.
If I didn’t have these privileges, even if I had worked just as hard, I’d still be making a student loan payment each month for who knows how long. Instead, I live in a nicer apartment than I would otherwise be able to afford and am contributing more to my Roth IRA, a type of retirement savings account that Congress created in the late 90s to help middle-class Americans.
Hi! I’m a policy reporter in Washington, D.C. If you liked this, feel free to follow me on Twitter (X), Instagram and/or TikTok @seanthenewsboy
