As of today, we are 100% debt free and no longer have student loans to pay off! I screamed with excitement when I pushed the “submit payoff amount” button. Our payments started in June 2011 when Dave got his first paycheck and we’ve been pouring into these loans like madmen ever since. Nine months later and our day has finally come! Here is a breakdown of the total cost of my student loans:
Total amount of loans taken out: $24,838
+ Total interest paid: $4856.39
Combined total: $29,694.39
The amount of debt we had isn’t too bad considering the average debt of a 2010 college graduate was $25,250 (which I thought would be higher). I know others who have WAY more than that racked up. We are very grateful Dave’s parents saved up for his school and that I saved a lot of money getting free room and board for 3 years at Michigan State. I knew nothing about loans when I took them out other than I couldn’t pay for school without them. I took out 3 loans total, two were subsidized and one was unsubsidized. The unsubsidized loan started racking up interest the day it was disbursed to MSU in 2008. The amount of interest we paid makes up 19.6% of the total amount we paid.
Just to give you an idea of how much we saved by paying our loans off early, take a look at this table. I used a handy loan calculator from CNN.com to see how long it would take to payoff if we continued to make the minimum payment on the unsubsidized loan. Keep in mind that capitalized interest isn’t taken into account with this calculator, so the amounts would probably be higher since it was unsubsidized.
Loan amount: $11,500
Monthly Payment: $100
Interest Rate: 6.8%
Payoff period: 15 years, 7 months
Interest paid: $7,163
Combined amount paid: $11,500 + 7,163 = $18663!
The interest would end up being almost the same amount as the loan I took out and nearly double the final cost! We only ended up paying $1618 in interest for this loan since we paid it off in 4 months. We are proud of our victory and very excited to make our money start working for us rather than dishing it to lenders. GOODBYE, DEBT!!!!
Do you have student loans? What’s your timeline for paying them off?