Ask the average person who went to college if they started paying back their student loans while still in school and they’re probably going to laugh at you. They may even LOL.
It’s no secret most college students live hand-to-mouth or loan disbursement-to-loan disbursement. For those with jobs, you can add paycheck-to-paycheck to the mix. Some even go into debt while in school, beyond the amounts they’re racking up in student loans.
A Student Monitor Financial Services Survey in 2016 found that 76% of college students reported paying their credit card bills in full each month. For the 24% who carried a balance month-to-month, their average balance was $667.
While that’s not a lot of money, consider that interest rates for student credit cards tend to be higher, so if you had typical student APR of 21.99%, it would take you 81 months to get rid of your debt by making just the minimum payments (and not making any additional charges), costing you $582.78 in interest in the process.
You Don’t Have to Stay In Debt
Despite what can seem like insurmountable financial odds, it is possible to pay down your debt while still in school. There are students who manage to go to school, pay their bills and even begin paying back their student loans before they have to. One such student was Carole Hawkins, director of programs for Texas Community College Teachers Association.
Hawkins, who’s 42 now, had gone to community college for several years after high school, paying as she went, before getting a full scholarship to Texas A&M University at age 23 to complete dual degrees in engineering. While the scholarship was great for covering the costs for school, it came nowhere close to making her monthly financial ends meet.
“I was a single mother who had daycare to pay for, so I took the federal financial aid that I was offered to help me pay for rent, daycare and all of that,” Hawkins said. “That said, I had a finite amount of money, but my family finally decided that my college education was worth helping to finance, so my step-father lovingly wrote me a check for $500 a month the entire time I was in school, which helped me pay for groceries, electricity and all that.”
All said, 18 months later and with a toddler to look after, Hawkins completed her undergraduate degrees with about $15,000 in student loan debt. After graduating, she took a job, started making her student loan payments, and then decided she really needed a masters degree. By this point, her daughter was seven.
“I said to her, ‘if you allow me one year to be the worst mom you’ve ever had in your whole life, I will finish a master’s degree in one year,’ and I did,” she said.
“But I didn’t stop paying [my undergraduate loans] when I took out my new loans,” Hawkins said. “It started off by accident. I didn’t know I could defer my loan payments. And when I found out I could, I still paid because it didn’t seem like very much.”
Of course, Hawkins was living in a small town of about 11,000 people where her rent was just $400 a month. So even on an annual income of just $27,000 at the community college where she was working, she was able to live what she referred to as a “fairly middle-class” lifestyle. All while caring for a child, getting a degree and paying back her undergraduate loans.
How to Pay Your Student Loans While Still in School
Now, to be fair, Hawkins was in school in the early 2000s when college costs weren’t as high as they are today. The average college graduate in 2016 graduated with $37,172 in student loan debt. That’s a big financial burden to shoulder starting out in your first job.
But, if you can figure out a way to set aside money each month to start paying your student loans while you’re still in school, be it as an undergraduate or while in graduate school, you’ll be in much better shape than your average peer.
The best way to figure out how to do this is to create a budget if you don’t already have one. There are lots of budgeting apps that can help you through the process, but pencil and paper or a simple spreadsheet also work very well.
Jot down your total income, taking into account all sources. Then write down all of your monthly bills. Everything, including that late-night slice of pizza you know you’re going to need as you study for exams. Once you’ve figured out your income and outgo, you can look at what’s left over and consider applying that toward paying down your student loans.
There’s nothing left over, you say? Now’s when it’s time to look at how you can cut back. Are you eating out a lot? Going out with friends a lot? Buying new instead of used textbooks? Buying new clothes each semester? Find the areas where you can cut back and trim your budget accordingly. Apply those savings to your student loans.
You can also look at ways to increase your income. Can you pick up more shifts at work? Use your hobbies and interests to earn extra income? Sell some things you no longer need?
Getting creative with your budget and doing without now so that you end up with less student loan debt when you’ve completed your degree will do a lot to set you up financially once you’re out of school and earning a steady income.
[Editorial Disclosure: PayDownMyDebt.com is a service that provides people with tools to pay down their debts through automatic payments. The purpose of this article, however, is not to encourage users to purchase that service. This article is educational and journalistic in nature and aims to help people learn how to pay down their debt, whether they use our site, another, or go it alone.]