Graduating from college can be an exciting new chapter. In a perfect world, you’ll land a well-paid job to start building up your savings. But six months later, it’s time to start repaying any student loans you took out. That shift can be jarring. Especially when you’re staring at tens of thousands of dollars in debt.
Daniella Flores, personal finance expert and CNET Money expert review board member.
I made a lot of mistakes when I started paying off my student loans. From avoiding monthly payments to getting scammed, my plan to payoff my loans wasn’t ideal.
Eventually, I was able to clear my $15,000 student loan balance, but it costs me an extra $4,500 from interest and fees from a scam. Here’s how I paid it all back — despite the costly mistakes — and how you can avoid them, too.
Read more: Student Loan Payment Pause Extended for 6 More Months for SAVE Borrowers
The 4 biggest mistakes I made with my student loans
I learned the hard way when paying back my student loans. Here’s what I did wrong:
🚫 I didn’t prioritize my student loan payments
I graduated in 2011, armed with a bachelor’s degree in computer science and $15,000 in student loans. Even though it was much less than the average student loan balance most borrowers rack up ($37,797, according to Experian), it was still a big number I wasn’t really prepared to repay.
So I did what most of us do — I made the minimum payment for years and didn’t really think about it. Then, after my first year of payments, I experienced several job switches, layoffs and surprise expenses. I pushed my student loans to the back of my mind. I didn’t see them as a priority compared with everything else that was happening. And that perspective led to several other mistakes.
🚫 I didn’t know how student loans worked
I can admit that when I signed up for my student loans, I didn’t really know how they worked. I just knew what I had been told: they would help me pay for the degree I needed to make a living.
I didn’t fully understand how interest worked or realize how quickly my loan balance could grow because of it — whether I was making on-time payments or not.
🚫 I put my loans in forbearance and deferment
If you’re facing financial hardship, forbearance and deferment are two ways to temporarily pause your student loan payments. For some people, the respite from monthly payments can help get you back on track. But they come with some trade-offs. Had I understood how they worked ahead of time, I probably wouldn’t have chosen either option.
After getting laid off from my job, a student loan debt collector suggested putting some of my loans in forbearance and others in deferment. I jumped at the opportunity, even though I wasn’t really sure what I was agreeing to.
When you place your student loans in forbearance, you can temporarily stop making payments on them — but I didn’t realize interest would continue to accrue and increase my balance.
Putting your student loans in deferment can be a better option for certain loan types since interest doesn’t always accrue. However, if you have Direct Unsubsidized student loans like I did, interest will still accrue and capitalize. Because of this, I ended up with an extra $2,500 of capitalized interest on top of my existing debt.
🚫 I fell for a loan consolidation scam
My last big mistake was a doozy. One day, I got a call from a company called 1file.org to discuss the status of my student loans and offer me a consolidation option. The company claimed to be part of the Department of Education and promised simplified payments, lower monthly payments and access to new repayment plan options if I consolidated.
So I did.
It consolidated my debt into a direct consolidation loan with the Department of Education and Nelnet as the servicer. I paid $2,000 in fees to 1file.org, without realizing I could have consolidated my federal student loans for free on my own.
I quickly suspected that I was being scammed after reading posts from other borrowers in an online message board. Thanks to the FTC, I found out later that I was right. 1file.org was running a student debt relief scheme that stole millions of dollars from consumers, including their data. (The FTC filed a lawsuit against 1file.org in 2019 due to fraudulent student loan schemes.)
I didn’t get my money back, but it was an eye-opener for me. I knew I needed a new approach if I ever hoped to pay off my debt.
How I got a handle on my student loan debt
After making a series of mistakes, I finally put a plan in place to tackle my debt once and for all. Here’s how I paid off my nearly $20,000 outstanding balance in eight years.
📉 I set a repayment goal
Figuring out how long it will take you to pay off your student loans can help you prioritize the right savings strategy. I used a debt repayment calculator to figure out how much I needed to pay off each month to achieve my goal. You can use the Fedstleral Student Aid’s Loan Simulator to set a similar goal.
📅 I enrolled in automatic payments
This might sound obvious, but it’s easy to miss a payment here and there and get into a bad spot. To avoid unnecessary interest charges, enroll in automatic payments with your lender to make on-time payments. Most lenders even offer a 0.25% discount for signing up for autopay.
💰 I paid more than the minimum payment
I was enrolled in an income-driven plan and my monthly payment was $111. To help clear my debt sooner, I decided to increase my payment to $350 a month. Sometimes I paid more on top of that, and other times I didn’t. When I made extra money from side hustles and work bonuses, I always tried to put a chunk toward my student loans.
If you’re in a tough financial situation and not sure if you can pay much more each month, start by looking at your monthly budget. See if there are any expenses you can permanently or temporarily cut out or minimize to squeeze more money into your debt payments.
🏦 I increased my income
If you have an aggressive debt payoff goal, you’ll probably need to make tough cuts in your budget. But cutting down expenses can get you only so far. I was able to make bigger dents in my debt by growing my income.
I worked a full-time job and took on multiple side hustles including freelance web development and writing. I also resold items and made money from my blog through sponsorships and income from ads and affiliates. Reselling didn’t take up too much free time, but it was tricky to manage several side gigs with my time after work and on the weekends.
I found a way to scale my schedule. I took one day off per week from my job and side hustles. I also blocked off time for work and exercise and regularly communicated my schedule with my wife to maintain a work-life balance.
📚 I learned more about managing my money
The best cure for my financial anxiety was educating myself. The more I learned about how loans work, their interest rates, and the different terminology and relief options, the better I felt about my repayment decisions.
Not sure where to get started? Here are a few personal finance books I loved:
Don’t make the same debt mistakes I did
Take it from me — you don’t want to fall into the common debt pitfalls that can cost you more in the long run. If you’re dealing with student debt and feeling overwhelmed, use these tips to help you get back on track.
If you’re feeling overwhelmed or if you suffer a financial setback like I did, check the Federal Student Aid website for guidance on lowering or suspending payments. There are also certain situations when student loans are forgiven or canceled if you meet certain qualifications. You can also switch to another repayment plan that best fits your financial situation that could come with other debt relief benefits.
