Recent college graduates have a big decision to make early in life, make the minimum payments on their student loans and accrue interest, or hit pause on life for a few years in order to pay off their debt early.
That is thanks to the fact that the average student now graduates with debt of $37,172.
With 70 percent of college students graduating with student loans, many will pay more than twice the amount they originally borrowed thanks to over 20 years of compound interest.
Despite the risks, a growing movement of cash scrapped millennials are choosing the latter, opting to pay off their student loans at all costs within years of graduating.
A few grads are pulling back the curtain and sharing how they managed to tackle over $50,000 in student debt within just five years.
Taking a break from the student party lifestyle to make payments helped him pay off $70,000 in 4.5 years
Jarrad Morrow managed to pay off his federal student loans in only four years in ten months. That is almost 15 years before the repayment plan was scheduled to expire.
While Morrow says the journey was not easy, it was definitely worth the long haul.
How he paid it off
Although school was going to cost about $3,500 per semester, Morrow said he opted to borrow the maximum of $8,000 per semester using unsubsidized federal student loans.
“I had no money management skills when I was younger,” he said.
“I just wanted to have fun maybe work a little here and there, and that is what I did.”
After graduating, Morrow received a letter tallying the each of his eight loans from various private lenders. Over the course of his studies he managed to wrack up about $70,000 in principal.
However, by making the regular minimum payments on his 20 year repayment plan, Morrow saw that he would have to pay an additional $80,000 in interest.
“I got mad,” he said. “If somebody thinks that I’m going to give them $150,000 of my money… they are out of their mind. So, I said there’s gotta be a better way.”
“Everyone thought I was insane. But, it was so worth it, it’s not even funny.”
Morrow said he took a break in the student lifestyle to pay down his loans, opting to put the kibosh on eating out with friends, taking vacations and other activities until his principal balance was wiped out.
“That was the opportunity cost,” Morrow said. “The cost of having the student loans hanging over my head was so much greater than going and enjoying that vacation for five or seven days.”
Morrow banked all the extra money he got from his first corporate job at the end of the month toward his principal balance.
He even went the extra mile and got a restaurant job on the weekends for three and a half years. He reckons his side income netted him an extra $12,000 toward his loans per year.
“Everyone thought I was insane. But, it was so worth it, it’s not even funny,” he said.
After about four and a half years of sacrifice, Morrow officially declared freedom from his student loans. now chronicles his journey on his YouTube channel.
How a NYC Teacher Paid off $85,000 in Four Years
With the cost of housing increasing beyond most recent graduates’ means, Melissa, a New York City teacher, blogger and YouTuber for Trials N Tresses, says she opted to live with her parents after graduation in order to pay off her student loans early.
How she paid it off
Though she pitched in for bills, food and other living expenses, Melissa says she managed to set aside $1,000 per month by moving back in with Mom and Dad after graduation. As her salary increased, she was able to squirrel away even more, allowing her to obliterate her loans in only four years.
Melissa said she prioritized loans with the highest interest rates, not the loans with the highest balances, as they tended to have higher monthly payments.
As for her lifestyle, she said she gave up pretty much all indulgences.
"If you can be focused enough to grind it out for a year or two, you can get rid of your debt pretty quickly"
She meal planned, traded dining out with friends for cooking at home, axed her cable and Netflix account, stopped all beauty treatments and opted to jog in place of maintaining a pricey gym membership.
“I became extremely cheap,” she laughed.
That said, Melissa said she refused to give up vacationing.
“I would take two to three small vacations per year and one large vacation because that was my sanity for the year. That was one thing I saved for, and I used my credit card points for,” she said.
“I didn’t want to give that up, I had given up everything else,” she added.
After a few years of sacrifice and diligent saving, Melissa says she is now free to spend what she would have spent on interest payments on building her life.
Pharmacist gets a second job to pay off $80,000 of loans in less than two years
While many grads are still making payments over a decade after graduating, Pharmacist Paul Tram said he paid off his student loans that totaled $80,000 in less than two years.
How did he manage? Tram picked up more than one full time job immediately after graduation.
How he paid it off
With two full time jobs, Tram enjoyed having a paycheck every week, which he says he immediately applied to paying his student loans.
“Every paycheck I got, I would immediately make a payment to my student loans, because with every day that passes, that loan accrues interest,” Tram said.
Tram added that working an extra job forced him to be thrifty, as he did not have enough free time to recreate.
“A lot of students finish school, and right when they finish school they buy a new car, they take a ton of vacation, they go out to fancy restaurants, they buy a house… and what happens is they just go more into debt,” Tram said.
“If you can be focused enough to grind it out for a year or two, you can get rid of your debt pretty quickly,” he added.
Law school grad steps up side hustle game and pays off $87,000 in student loans in 2.5 years
When it came to choosing law schools, Kevin Bubb took the fiscally responsible route and selected a University that offered him a 50 percent scholarship.
In spite of his cost saving measures, Bubb still took out a series of eight federal student loans, some with interest rates as high as 7.9%.
After graduating, Bubb said he owed so much interest, his first few payments did not even touch his principal balance.
“You ever hear of throwing money away? That’s basically what this was,” Bubb said.
How he paid it off
Bubb said he was able to pay off his student loans early by not getting too comfortable and living the “lawyer lifestyle.”
Whenever Bubb noticed he had a surplus in his bank account, after minimum payments and living expenses, he immediately paid the money to his student loan.
“I wanted to avoid getting complacent with my paycheck,” he said.
Bubb added that his biggest mistake was not refinancing his loans during the first year.
“Refinancing means you’ll lower your interest rate, which then means that you’ll pay less interest overall and get more of your money working for you,” he said.
Despite a few hiccups along the way, Bubb managed to pay off his debt in roughly two and a half years.
Was it worth it?
While some experts suggest that paying off a student loan early can prevent borrowers from being able to invest in their future, these grads argue that paying off their loans early has given them options.
While they were not able to enjoy parts of their life for between two and five years, each agrees that making the sacrifice and nipping their student loans in the bud were well worth it.
“It all comes down to a few things, hard work, dedication and sacrifice. There’s no magic formula,” Morrow concluded.