NerdWallet's Smart Money Podcast - How the Nerds Do It: How a Student Loans Nerd Paid Off Her Debt
Episode Date: October 27, 2022Paying off student debt isn’t easy — even for a Nerd who writes about it. In this episode of our “How the Nerds Do It” series, student loans Nerd Anna Helhoski talks about how she paid off her... debt, the challenges she faced along the way and how you can find the fastest and most affordable way to resolve your student loans. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email podcast@nerdwallet.com. Like what you hear? Please leave us a review and tell a friend.
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Welcome to the NerdWallet Smart Money Podcast. I'm NerdWallet investing writer Alana Benson.
This episode, we're continuing our series called How the Nerds Do It, where we talk with our nerds
about how they personally tackle the issues they write about every day. This week, we're talking
with Anna Helhosky, a nerd who writes about student loans who actually managed to pay off
her loans. She's going to talk us through how she managed to do it and some important details that non-nerds may not think to look into. Hey,
Anna. Hey, Alana. Thanks for having me. Thanks for being here. So I'm really excited to talk
to you about this because it's such an important topic. So I just want to dive right in. Can you
give us a brief overview of how you managed to accomplish this huge task of paying off your
student loans? Absolutely. And it felt really huge at the time and just continued getting bigger
along the way, which is really kind of the frightening piece about it. It took me just
under 10 years to repay $40,000 in federal student loans and the interest that accumulated at the
time. I graduated from college
in 2010, took my six-month grace period. During that time, interest was accruing and it capitalized
and was added to my principal. That is standard. That happens to everybody. If you don't make
payments during your grace period, you're going to end up with interest that has been occurring
that will capitalize. And then anything moving forward will have interest accruing on interest,
essentially, is what ends up happening. It's how student loans kind of get out of control.
I was making some payments initially, and I realized this is more than I can handle. I
enrolled in a graduated repayment plan, which basically starts your payments out a little bit
lower, and then over time, they'll increase. But it stays, it keeps you within that 10 year period, you're still paying
off your loans within 10 years, it doesn't extend or do anything else like that. So along the way,
some things happen. In 2013, I was laid off from a news job, and I ended up taking a six month
hardship forbearance. Interest also occurred during that time. And when I restarted,
that accrued interest was once again tacked onto my principal. About seven years into payments,
I enrolled in an income-driven repayment plan. That graduated plan had finally kind of paid up,
and I ended up with a much higher loan payment per month than I had been anticipating. I think
it increased like $300 within a month. And I just said to myself, this is not going to fit my budget. This is not happening. So that's when I enrolled in an income
journey payment plan, which had at the time lowered my payments. And then in the next few
years, as my salary increased, my payment amount did as well. I paid it off all at once in February
2020. Now, anyone who has student loans or who has been following along with student
loans news knows that in March 2020, all federal student loans were paused, and that has been
interest-free this entire time. Oh my gosh, that is... Great timing, right? That's devastating.
You know what? I can't go back because I never could have predicted it. I could never predicted
the pandemic, first of all. And I also could never have predicted that student loans would
be paused for over two years. So I'm glad that I have it off my back. It's so funny how those
things worked out. But that is just literally one month before it was paused. It's crazy.
So let's go back to the beginning. What were your student
loans for? What did you study? Where did you go to school? That kind of stuff.
My freshman year of college, I went to Marymount Manhattan College. It's a private school on the
Upper East Side of Manhattan. So that was about $32,000 a year. I was a communication arts major
with a political science minor, but I had pretty
quickly decided that this was actually not really the school for me. And I ended up transferring,
and I transferred to a state school. College was definitely going to happen for me. It was
the expectation. It was what I wanted to do, which is also a pretty crucial component. But student
loans were also the expectation. And me, like about
two-thirds of all college students, needed to take on student loans in order to afford college.
My family was firmly middle class. My mom had a couple master's degrees and had gone to school
for practically her whole life and taught education. My dad kind of floated around,
half finished some semesters of college. He owned like a trucking company
and his message was, do whatever you want,
just make sure that it makes you happy.
So when you were picking your major,
did you think about your potential earnings options
or was it mostly just, this is what I wanna study,
this is what I wanna do.
And the thinking of balancing your future debt
with your future earnings, did that play in at all?
That was not even remotely a concept in my brain. Truly. I wish that it was. I wish that I was
someone who at the time really thought like that, but I just didn't. I was one of those really
obnoxious kids that was like, I want to be a journalist when I was like 10 years old. For me,
studying political science was me being practical, which is kind of absurd to
think about when you actually look at how social sciences tend to play out once you graduate in
the job market. And now that I read about this stuff all the time and research this all the time,
it was not the most practical major or minor by any stretch of the imagination.
Yeah. And hey, I was a double English and classical studies major. So for years, I told people that I majored in bar trivia. So I totally understand. Sometimes you wind up in a good spot, but I certainly never more about weighing potential earnings with weighing what I was spending to go to school, would I have made the same decision?
Do you think it's worth having that conversation with kids to say, hey, like you may end up having to pay these off for the next 20 years of your life?
Do you really want to study English or journalism? Or would it maybe be wise to think
about other fields that could potentially make more earnings? I don't know. Where do you fall
on that question? It's a strange question because there's almost a philosophical answer and then
like the very realistic answer. So if I was just doing your average personal finance advice,
I would just say, you really need to think about your earnings. It depends fully on
your family situation. That is very real. And that's probably the hardest thing I think for
people to come to grips with. It doesn't work out for everybody. I think you do have to weigh
your own family and your own financial situation with the type of school that you're going for and what you're majoring in. So it really does make a difference.
However, I will also say that
college is more than just like job training.
I think that it's also something that
you have to ultimately be happy with in some way.
And I'm not saying that you have to just
only chase your dreams and you'll always be happy,
but I don't know, it's kind of what I did and it has made me happy. And I think
it depends on how you feel about work. Was the money something that you were thinking about
a lot? Were you like, well, I'm going to have $22,000 worth of debt just for my first year,
or were you not thinking about the financial aspect
as much? I think it's really hard for people who are 17 or 18 years old to really quantify that
amount of money. At that point, they're just imaginary numbers, right? Totally imaginary
numbers did not have a realistic view at all about what that really meant. I remember that when I was applying to
schools, my mom really urged me, you know, think about a state school, you could really lower how
much you're going to be taking in loans. I was just like, I'm going to go where I want. And that
was kind of foolish. And she ended up being right. So when it really clicked for me about cost
actually happened in that freshman year, one month in, I knew it wasn't the right clicked for me about cost actually happened in that freshman year.
One month in, I knew it wasn't the right school for me.
But as a communication arts major, I wasn't going to be starting to actually do journalism until my junior year.
So I really told my mom, I want to apply to Columbia and NYU and I want to transfer 4.0.
I was like ready.
What I didn't know was that my parents who who had recently divorced, really couldn't afford to help
me. So in February of my freshman year, my mom got a call from my college saying that they hadn't
received that semester's check. It had been my father's responsibility. And I would be kicked
out of my dorm. And they told her that they were going to put my things on the street on East 55th
Street the next day. Oh, my gosh. So that's like a real wake up call of like the realities of money.
It was. So my mom put $10,000 on a credit card and took an additional parent plus loan. Those
are federal loans that parents can take, pay off that credit card immediately and started making
payments on the loan. She really pretty gently but firmly told me that if I plan to transfer, I should transfer and I needed
to go to a public college. So I was really crushed. And that was when I really finally
understood the situation that just because I wanted something, it wasn't going to happen.
Imagine that. But when you're 18, that's just not what you're thinking of. So I ended up choosing
SUNY Purchase. It wasn't my dream school. It was kind of an artsy public
college. It was really funky and really weird in a New York City suburb, but it ended up being a
really good choice. They had a great journalism department among the SUNY schools and a really
wonderful political science department. And I could start studying journalism right away.
So it ended up being the right choice. And how much did you leave school owing altogether?
Altogether, when I got my bachelor's from SUNY Purchase, after I'd also had that one year at
a private college, I left school with $23,156. I looked it up. But as you might remember,
I had paid off $40,000 of debt. So how did I do that? That was all due to that interest.
I was able to curb some of my costs by not living on campus.
I did an internship for like six months where I left my campus altogether and all I was
paying was tuition.
My senior year, I was just paying tuition and fees.
And that ended up really lowering how much I ended up ultimately having to
take out. Okay. I'm curious about your thoughts on this. I know we obviously want to encourage
kids to follow their dreams and pursue what they want to in life. And I fully believe that there is
a lot of value in the arts, but do you think it's a good idea to really have a serious conversation
with kids who are looking into their college choices and considering taking out really large loans and talking about the financial ramifications and saying, hey, you might have to pay these loans for 20 years.
Do you want to do that?
I don't think anybody wants to pay loans for 20 years ever.
But is it worth it?
I think that's really the question.
So it's a balance of what do
you want to do? And how much is it going to pay? And that's a lot more complicated than you might
think. So you have to think, what is your family's financial situation? Do you have to take out loans?
Are you going to have help? That will probably be a pretty big determining factor. What are
earnings like in your field? Are you planning to live in a city or a suburb or a rural area? That'll impact your earnings and also your cost of living.
Perhaps most importantly, are you planning to get an advanced degree? So say you're studying
classics for a bachelor's. If you have to take on debt, you might want to rethink, or if you do have
to take on debt, maybe go to a public school. It just won't be quite as expensive to
get that degree. But if you're going to study classics and then get a law degree, it's probably
not a bad idea. It's got pretty high economic ROI. There are plenty of majors that don't really have
any kind of economic ROI. And by that, we mean return on investment. So a lot of the arts and
social sciences, fine arts, anthropology, drama, these are things that tend to not recoup what the costs are overall. But generally, for the majority of college programs, students can recoup the costs, which I think can help anybody in any situation.
And I wish when I was 18 that I knew or that some of these things existed.
But it's always helpful to compare data on costs, earnings and debt.
So the college scorecard is a great one. It's a data tool from the U.S. Department of Education.
There's also an interactive map of what's called price to earnings premiums from Third Way.
And then finally, the Buyer Beware tool from the Georgetown Center for Education in the
Workforce.
Those are all three really great ways to try and measure your debt versus your costs versus
your earnings.
It's going to be really individual to everyone.
I don't regret what I did, but I think that I might've made some alterations along the way.
I fully agree. I wish that someone had sat me down and said, Hey, English major,
you may want to just consider these things. There was really no educational offerings or help from
my college saying like, Hey,, you're entering into this field.
Here are potential jobs that you could have as an English major. And I wish that I had just
thought about that a little bit more before going into it. But I think it plays into what we were
talking about earlier is that when you are at that age, it's really hard to comprehend $20,000, $30,000. That's
amounts of money that I was getting paychecks from a sandwich shop that were like $150.
Yeah, agreed. I was also working in restaurants and be like,
oh, well, I made like $100 today. That was an incredible day. Greatest day ever.
Best day. Greatest day ever. Best day. For 10 hours of work, I did it. And
yeah, I could not comprehend what going to a college that costs $32,000 a year meant.
So speaking of work, let's get into how you actually managed to pay these loans off,
which congratulations is a huge accomplishment. Thank you.
So did you have to take on extra jobs? What
was your strategy? Were there things that you had to miss out on? Just what was the process of
actually paying it off like? So I got a job right away. That was really cool. I got a job that was
totally not in my field and I only worked there for a month. And then I got my second job. And that was in
journalism. And that was so exciting. I was making $30,000 a year. I've lived with two other people.
When I got my first bill, I realized I am not going to be able to make my rent and buy groceries
and pay for gas and afford this loan. So that was kind of a wake up call of, wow, what I earned is not actually
enough to pay this off right now. It was hard at the beginning. As I mentioned, I ended up getting
a graduated repayment plan initially. And that definitely helped. Calling my servicer to do that
was such a important thing. I urge everyone to understand all of your repayment options as soon
as you get out of school, understand how much you owe, understand what is in front of you. So that did help to lower my
payment in the immediate. I just worked that $30,000 a year job for like three years. I was
doing some freelancing and stuff on the side. I had worked with a friend's audio production company,
which was like kind of a blast and did that.
But it was just enough.
I was just scraping by.
I was certainly a month to month person.
I definitely did not do the kind of maybe travel that I wanted to do.
I bought a lot of, mostly by preference,
like secondhand clothes.
I tried to wash my grocery bills as much as possible.
By the time I switched to an income journey payment plan, I was working for NerdWallet and I was earning a little bit more money.
And I'm glad that I went on that plan. I consolidated my loans. I had a new $242
payment that I could afford. I recertified my payments every year. That meant that I had to
resubmit my income every year. That's how you stay on an income driven repayment plan.
My payments grew as my salary did. For a lot of borrow stay on an income driven repayment plan. My payments grew as my
salary did. For a lot of borrowers, an income driven repayment plan could be the best plan to
start on. But because I was on an income driven repayment plan that set my payments at 10%
of my discretionary income, and my loan term had been extended, but I knew I was going to pay it
off sooner. So as my salary grew, my payments grew, I was making higher payments. They were still pretty affordable and it helped me knock down
my loan principle faster. So looking back, what do you think that you did well with your loans?
What do you think that you did not maybe do so well in terms of paying them off?
And what's something that non-nerds may not necessarily realize? I try and remember and I
try and remember this all the time. You can only make decisions based on the information that you
have at the time and you being the person that you were at the time. Me at 18, I wish I'd applied to
more schools. I wish I'd worked harder in high school and could have gotten a scholarship.
Maybe I attended a highly selective university like the one that had waitlisted me,
but I didn't.
And I had some serious difficulties at home.
I wasn't in a place to perform better
than I did academically.
I was a solid A minus student.
So yeah, I wish that I had a little bit more drive
at that time and probably could have put me
in a better place.
There are a lot of scholarships
and things like that out there.
I did end up getting a scholarship and that did help,
but that was only gonna be a one year scholarship.
I hadn't even thought,
what about the second or third or fourth year
and how would that be affordable at that point?
Do I wish that my family had had more money
so I could have transferred
to one of those very selective colleges?
Sure, but also not.
I think my life would have been different
and I also would have had a lot more debt.
I would still be paying off that debt.
There's no question in my mind about that.
It was not a tenable prospect. So in that respect, I'm glad that I did what I did. I think it's safe
to say I made some decisions that were not the best for me. And then I made some really smart
ones. And I'd like to say that came with age. So I hope that it did. But I don't think that I
realized how much affordability mattered.
And I really would urge any parent or any student to really, really consider that.
I probably should have just started a public college and done all four years that way or
even graduated early to save money.
But I did do some other things.
I didn't live on campus the entire time.
That helped me save money.
Room and board is very expensive.
I worked summers during the school year and that helped me save money. Room and board is very expensive. I worked summers during
the school year and that helped me save money. I would say this, in retrospect, I wish that I would
have done more internships. And I think summer internships would have been better than spending
at serving tables, but I did what I had to do at the time. What about something that you think you
did really well? Something I did really well, speaking of internships, was I did a six-month full-time, only-paying SUNY tuition internship covering state politics in the New York State Capitol for a fantastic internship that I'll give a shout-out to, the Legislative Gazette.
And it was a wonderful opportunity.
And I came back just way better at my craft than I was when I left when I
was just a student. So I always urge anybody to really, if that's one way that you want to think
about your life after college, think about the internships that you're doing when you're in there.
Yeah. And that probably set you up for success to then get a job at a place like NerdWallet and
then increase your future earnings to better pay off your debt.
Absolutely.
This has been so great. I want to just
ask you at the end of the day, do you think the loan amount was worth what you got out of it?
Definitely. It's worth it for most people. If you're at a reasonable amount, it's worth it.
So long as you finish, completing college is really critical to gain the benefit
of increased lifetime earnings that generally come with a degree.
You know, as we talked about before, it obviously matters what you study.
I'm glad that I did what I did.
I have a long list of policy changes I would love to see happen in higher education with
loans, with the cost of college.
But operating within the confines of reality, going to college, even though it meant taking
on debt, was absolutely the best decision I ever made.
And with that, Ana, can you tell us what your takeaway tips are?
Absolutely. So first would be when you're making that college choice, weighing public school versus private school.
Public school is generally cheaper, but you could get scholarships and aid that could make private school less expensive than you think.
It really is going to depend on your individual situation. As you're thinking about your major, also think about the jobs you could get later on.
Weigh the cost of your degree to potential earnings. And my best advice is this, do the
internship. You won't regret it. And finally, knowing your repayment options and how much you
owe can make all the difference. If you can stick to the standard plan, try and do it. It'll be 10
years. It'll be rough, but it'll be over.
If you can't do it, then it's helpful to know about all of your options.
And that's all we have for this episode.
Do you have a money question of your own?
Turn to the nerds and call or text us your questions at 901-730-6373.
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