How I Paid Off $220,000 in Student Debt

A couple of months after graduating from Georgetown Law School, I started to get notices that my loan’s grace period was ending. 

That’s when it sunk in that I had over $200,000 in student debt to be paid off — and the panic set in. I didn’t even know how to make a payment! 

But by the end of that week (and after a lot of research on student loans), I had a concrete action plan for exactly how I was going to tackle my loans.

Before we dive into my strategy, it’s important to note that your income plays a huge role in how much you can afford to pay toward your student loans each month. However, the strategies I used to pay off my loans in two years can apply no matter your income level or how much you owe.

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Make an Action Plan and Know Your Motivation

As a student, taking out my loans felt like playing with monopoly money. Out of sight, out of mind, right? 

But making a concrete action plan to knock out my loans was the first step toward my financial freedom. I wanted to be able to choose what to do with my life (pursue entrepreneurship) without the weight of making constant minimum payments.

I knew my goal would be to pay them off as quickly and aggressively as possible. My motivation was the interest I was rapidly accruing: If I had stuck with the standard 10-year repayment plan, I’d end up paying over $82,000 in interest alone. That would have increased my total to nearly $300,000! 

That’s the problem with paying just the minimum payments — they’re absorbed by the interest instead of chipping away at the principal, which makes paying your loans off even more difficult. 

READ MORE: How Student Loan Interest Works

Another important thing I did right at the beginning was sit down and evaluate exactly what my loans looked like: 

• What was the loan amount and the interest rate? 
• What types of loans were they? 
• Who was servicing each loan? 
• Were any of them federal? 

Listing them out really helped me see exactly what was going on, and it’s where I learned my average interest rate was 6.79%. A rate this high meant nearly $700 a month in interest alone! 

That’s when I realized I had to look into refinancing my loans to reduce my interest rate and meet my goal of paying off my loans quickly.

Consider Refinancing

There are pros and cons to refinancing your student loans. 

One of the downfalls is that you will lose many federal protections, so it’s important you research your loans carefully and weigh the benefits accordingly. 

Because my goal was to pay off my debt as quickly as possible, I determined it was worth the risk to save thousands of dollars in interest by refinancing. 

To get the lowest interest rate possible, I made a few key decisions when refinancing my loans. 

I shortened the loan term

The first was the term of the loans: the shorter the term, the lower the interest rate. I chose the shortest term possible, which was five years. 

One thing to keep in mind is that while shortening your term means less interest, it also means you’ll have to pay more each month (since you’ve condensed the total amount into fewer payments). 

I chose a variable interest rate

Next, I had to choose between a fixed or variable interest rate. 

A fixed interest rate stays the same for the term of your loan, but a variable interest rate changes to reflect the current market. Variable interest rates will always start out lower than a fixed rate, but they will increase every so often. 

Once they reached a certain threshold I wasn’t comfortable with (remember that my goal was to have the lowest interest rates possible!), I refinanced again. Over the two years it took me to pay them off, I re-refinanced three separate times! 

I picked which loans to refinance

Next, I decided if I wanted to refinance all my student loans or selectively exclude some. 

You don’t have to refinance them all — pay attention to loans that may have a lengthier grace period (no interest) and consider excluding those from your refinancing. 

I negotiated with lenders

Finally, I had to decide which lender to refinance my loans with. 

Again, my goal was to find who would give me the lowest interest rates, so I applied for quotes from five different lenders. The two who gave me the lowest were SoFi and Earnest, but I’m a lawyer and I love to negotiate, so I tried to get each of them to go even lower!

I sent an email to Earnest, who had given me a 4.37% interest rate, and told them I wanted to refinance with them. I asked if they would match or beat SoFi’s offer at 4.115% and they did. 

Next, I sent an email to SoFi with the updated offer from Earnest and asked if they could match or beat it. After going back and forth until neither lender would go any lower, I got Earnest to give me a 3.84% interest rate — almost $3,000 in interest saved through a simple email exchange! 

READ MORE: How To Refinance Student Loans

Set a Loan Pay-Off Date

Once I refinanced, I set a goal for paying off my loans based on how much I knew I could pay towards my debt each month. 

If I kept living my broke student lifestyle, I calculated I could pay $9,000 a month toward my loans and complete my payments in two years. 

The main focus then became tracking my budget and my spending, which helped me cut any unnecessary expenses and stay on track to meet my goal.

When making any payments, I directed any additional amount over the minimum to go directly toward the principal of my loans — not toward the interest. This helps to reduce the principal, which then reduces the amount of interest. It’s important you ask your lender how to do this!

@erikakullberg What they don’t want you to know about paying back student loans 🤯 #lawyer #personalfinance #moneytok #studentloans ♬ original sound – Money Lawyer Erika

Every paycheck for two years, I determined how much I could pay beyond the minimum, then tracked it in my trusty spreadsheet. I also became very intentional with my spending to remain on track. 

There were several months when I couldn’t make my $9,000/month goal, so I had to consciously reduce my spending over the next few months to increase my payments to stay on track. 

A trap I learned to avoid was lifestyle inflation, which happens when your income increases and your lifestyle costs rise with it. 

Even though I was a high-paid corporate lawyer at this point, I never let myself think I was anything but a broke law student. If I let it get to my head, I’d start spending more on fancy dinners and nicer apartments when the reality was I didn’t need those things, especially if I was trying to meet my two-year goal of becoming debt-free. 

TL;DR

Had I not used these strategies and stuck with the standard 10-year repayment term, I would’ve ended up paying over $72,000 more in interest! 

Instead, I evaluated the realities of my student loans, refinanced, then set my goal and stuck with it to pay off a total of $225,526.77 in student debt in two years!

Ultimately, how much you make is less important than the percentage of your income you can save toward your goals — whether that’s to become debt-free like me or to save for a different goal like an emergency fund. 

So don’t panic, set those goals, and stick with it!

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