HN Explorer

Ask HN: How long did it take you to pay off your student loans?

31 points by wcarss ↗ HN
I'm entering my last-ish year of undergrad study, and I'm approaching 20k in student loan debt; I am optimistic about paying off my loans (a friend paid his in just under two years), but with all of these scary articles about the "loan crash" coming, it seems like it might be a harder thing to do than I expect.

note: I'm a CS student from a Canadian university, but I'm interested in US and other responses too

73 comments

[ 3.0 ms ] story [ 90.6 ms ] thread
JacobAldridge
Note: I'm an Aussie, and the Aussie HECS (now HELP) system is a little different. The government loans you the money; interest is charged at CPI (so usually half that of commercial rates; my debt actually decreased at one point when Australia measured negative CPI growth!). To ensure their debt, it is compulsarily repaid as a percentage of taxable income - the higher your income, the higher the percentage goes (and yes, this does create situations where a payrise leads to a negative cash-in-hand outcome).

My debt topped out just over $20K. I graudated at the end of 2002, started paying it off in 2003 (ie, my first salary was high enough for the threshold) and it was paid off in mid-2009. I could have paid it off sooner, but the system means there are usually better uses for my disposable cash (mortgage, even cash deposit!). Still, it's good that it's gone. Good luck with yours.

cubicle67
Same here, but I was lucky enough to go through the system earlier, when prices were lower. My degree (Engineering) cost me about $12k, about half of which I was able to pay up-front at significant discount
JacobAldridge
Yeah, they changed the rules around the significant discount just as I started paying it off, which was a nuisance. More so for my beautiful wife, who's paying off a law degree (more expensive again) with no incentive to do so earlier.
16s
US here. BS from large state technical university. I had about 18K in loan debt upon graduation. Paid it off in 2 years. I could have drug it out for 30 years, but wanted to pay it off. I am glad I did.
byoung2
I was lucky enough to go to a public school (UCLA), which cost less than $5000/year at the time. I was able to come out debt-free, which is huge, considering some of my high school friends have over $100k in debt.
Ad_Astra
Curious, when did you attend? Current fees alone are close to $11,000/year at the UCs now. Nonresidents have it even worse.
sirsean
I paid mine off within about two years after graduating, but later learned that doing so wrecked my credit. (The credit score people want to see a long record of payments, not someone who quickly pays off debts in full.) I felt that it was better to pay them off NOW, rather than pay 10x as much over the course of decades.

I'm sure if you have a credit card or something, you wouldn't have to worry about that.

hyperbovine
Unbelievable. I have never bothered to check my credit score, as I can't bear the thought of forking over even more money to that crooked industry. If what you say is true though, mine must be terrible as well. And here I thought acting responsibly and paying off my debts in a timely manner would be looked on favorably.
younata
the entire point of a credit score is to measure how likely the lender is to get a lot of money from you.

It makes sense that deadbeats have low credit score, however, it also makes sense to lower the rating of someone who pays it off fast, thereby causing you to not gain as much money as if they had waited 10 years to pay you off.

I hate that industry so much.

nkassis
exactly, they want people who get tons of credit debt, and pay the minimum every month for 30 years.
Goladus
The "credit score" is important but when a good lender is evaluating the risk of a potential borrower, they won't rely on a mere score they'll consult the actual credit history.

A credit history is basically a record of loans and payments. If you're late on a payment, long enough for your lender to report it to a credit agency, then they will show up on that history.

In this case: paying back a $20,000 loan in 2 years is impressive but doesn't really say much about your ability to pay back $300,000 over 30. So yes, it might have been marginally better to pay back the $20,000 over 10 years. If you're going to loan someone $300,000 to buy a house, you want to see data that the person is capable, organized, and diligent enough to pay it back. People paying back mortgages in 2 years is probably not a serious problem for most banks.

You can see your credit history at https://www.annualcreditreport.com/cra/index.jsp

gcb
[citation needed]

do they really disclose that? That you would be better being a sucker for credit?

[deleted]
(comment deleted)
jrockway
Do you want a high credit rating, or do you want money in your pocket?

If you don't need to borrow money, then you don't need a credit rating. In this day and age, a house is no longer a given (since they have proven to be extremely poor investments at times), so you don't necessarily "need" a mortgage anymore. If that's your situation, then your credit rating means a lot of nothing. You don't need a good rate on your mortgage. You need cash in your pocket.

Goladus
It's probably more accurate to say that the loan you took and paid back was insufficient to establish a high credit rating due to insufficient history, rather than "wrecking" existing good credit.
drinian
Right, I also paid off my loans within two years, and it doesn't seem to have affected my (very good) credit rating negatively. I've also had a credit card in my name (with my dad as guarantor, at first) since I was about 16 -- and he has sterling credit. That helps a lot.
patio11
3 years. I hate debt, so I lived like a monk and sent a thousand back every month. It was good preparation for my next job as the low salaryman and now getting company off ground.
wccrawford
I did the same. But I seriously considered investing the money instead of paying it back, and earning a bit off it instead. I would have -just- paid it back before the stock market crash. I'm glad I didn't take the chance, and I wouldn't in the future, either.
ultrobast
UK here. 7 years & counting. Haven't had a statement in ages so I'd have to guess roughly 5 more years before I clear it.

I am paying the barely-above-interest monthly rate though.

nkassis
I started paying back this year, at my rate, almost 10 years but I expect to ramp up the payments in a few years.
elptacek
I graduated in 1993 with roughly 45,000 USD in college loans. I sent in my last payment in the summer of 2006. Since I had a year before I had to start paying them, that's about 12 years.
cperciva
Zero seconds. I received scholarships for both my undergraduate and graduate degrees, and graduated several thousand dollars ahead.

I don't know what the numbers are elsewhere in the world; but in Canada over 40% of university students graduate with no debt.

imp
In the US, I think it's less than 10% graduate with no debt.
pbhjpbhj
Your scholarship paid course fees and living expenses for 4 (?) years, wow, you must be good!

What's your subject? What was your dissertation title, which Uni?

cperciva
wow, you must be good!

I've been told that starting university at age 13 and winning the Putnam competition support this hypothesis. ;-)

Your scholarship paid course fees and living expenses for 4 (?) years [...] What's your subject? What was your dissertation title, which Uni?

As an undergraduate student, I received a $20k entrance scholarship; about half of that went to fees, and the remainder was plenty to cover my living expenses since I was living with my parents. This was at Simon Fraser University and I was studying mathematics. SFU doesn't have undergraduate dissertations per se, but the paper I published in Math.Comp. is rather equivalent: "Rapid multiplication modulo the sum and difference of highly composite numbers".

As a graduate student, I received a scholarship worth tuition + about 700 GBP/month (the amount was adjusted for inflation each year) -- the total value worked out to somewhere around $100k. This was at Oxford University (but the scholarship was funded by the UK government) and I was studying computing. My thesis title was "Matching with Mismatches and Assorted Applications".

maxklein
At what age was your peak, or do you feel it is still to come?
cperciva
Which peak? Peak of brilliance? Peak of knowledge? Peak of productivity?

I don't make as many new discoveries these days as I used to; but that's at least in part because I know much more.

maxklein
Peak as you define it. Like comedians would speak of when they peaked, some don't think they have peaked yet.
AgentConundrum
I spent the summer following college (also Canadian, btw) doing a lot of nothing, just generally failing to find a job. I moved to Halifax (from Kingston, ON) for a job in October of that year and when the dust from the move settled I owed about $22k ($6k OSAP, $10 CIBC Line of Credit, $6k Visa). That job lasted just shy of three years, and when it ended I only owed $4,349.16 (taken directly from the NSLSC website), so I paid off about $18k in 2y10m, for an average of about $530/mo.

As for the particulars:

* I went to college, not university, so you'll likely get a better job than I did, faster than I did.

* Starting salary: $38k

* Starting rent: $840/mo

* I flew home around 3x a year, for between $6-800/trip

Advice:

* With each pay, I'd pay minimum payments for my line of credit (smaller interest), and throw everything else I had (except rent) at my credit card. This is important; if you owe > 1 creditor, pay down the highest interest debt first, and pay minimums to everything else. This way, you minimize the amount of interest you end up paying overall.

* If you're used to having roommates, you might want to consider keeping that arrangement for a while. Take advantage of "living like a student" while you're still used to it, even if only for a little while. You'll save a lot on rent, and you won't miss the luxuries you've never known. This is pretty much how Alexis and Steve started reddit, incidentally. They just kept on living like students to minimize expenses.

wcarss
Thanks for the high volume of info - this is exactly the kind of data I was hoping to see.

The thread seems split between "<4 years" and "7-10 years", or close to. I am curious whether it's primarily lifestyle choices, income mismatches, or what that's causing the gap.

AgentConundrum
You're quite welcome. I didn't think a generic "I did it in x years" post was what you were looking for, since it doesn't really mean anything. At least with some details you'll have a bit of context to compare with your own situation.
UrLicht
I'd like to offer an alternative perspective on the order of paying off accounts. While it's true that you will save on interest payments if you pay off the higher-interest accounts first, if you really are hell-bent on paying off as much debt as you can as fast as possible, it won't amount to much of a savings.

Couple that with the fact that large amounts of debt can be extremely daunting (and downright disheartening) I'd recommend paying off the accounts with the smallest balance first. The psychological reward you'll get from that is (at least it was in my case) enough to keep you going until you've paid all the accounts off.

With the way the economy is going, I believe that those of us with debt will be the ones who suffer most, so make hay while the sun shines, so they say.

AgentConundrum
I cheated on it a little bit. I sort of bounced between types of credit for a while. When I was in college, my grandfather cosigned for my line of credit, so when I was making enough money to allow it, I converted it into a standard loan to get his name off my debt. Not long after that - a few months, maybe - the bank called and said that I was such a good customer that they'd love to give me a brand new line of credit (with a $5k limit increase over the old one), and that they could consolidate my visa and loan debt onto the line of credit, which sounded like a great deal. So I did it, but I guess I missed out on the psychological reward you mentioned.

My student loans (the 'OSAP' in my top post - Ontario Student Assistance Program) were just this thing I never paid attention to. They just draw $96 from me every month, and I don't care that they do. When I have the money to pay it off entirely, I will, but for now just getting them to accept > $96/mo is such a massive hassle that I don't bother.

When my line of credit was paid off, the only "reward" I got from that was, "that's it?" I knew I still had that damn student loan, but there was little I could do about it for the reasons listed above. So I guess I just started living my life.

Oh, and "paying off the highest interest first" and "paying off the smallest debt first" were the exact same thing for me, since my smallest debt was the credit card.

ronnier
I did the unthinkable and worked full-time for both my undergraduate and graduate degrees. I walked away without debt. It was hard, but I recommend it over taking on debt. There are other benefits, such as finishing school with working experience and learning how to master time management.
AgentConundrum
I'm really kicking myself for this. My first semester in college I worked part-time at a corner store near where I lived (with family). I quit after four months because I got paranoid about selling cigarettes - apparently one of the tobacco companies had sent a kid to do a check, and I'd accidentally sold to a minor. I probably wasn't in any danger criminally, because I was told the cigarette companies use "old kids" (i.e. a year younger than legal) whereas the cops use 13/14 year olds and are pretty obvious about it. Still, I got paranoid and started carding so much that people were fairly regularly bitching me out about it and I couldn't take it anymore.

I wish I had kept that job now, since the constant pressure I feel about my debt now is probably worse than "normal" job stress back then.

pbhjpbhj
>I did the unthinkable and worked full-time for both my undergraduate and graduate degrees.

Distance learning?

I've done an undergrad level diploma over 3 years with the Open University (just over one-third of a B.Sc degree IIRC) by working 4½ days and studying in my spare time. But I could never have done my undergrad degree and worked full-time - lectures started at 9am, lab days in until 5pm, other days there would be reading to do, presentation prep, course assignments, tutorials (oral study classes with a postgrad or lecturer doing questions and going over course materials). Do 9-5 (not that uncommon) and then do a couple of hours of reading or essay writing; when do you have time to work for money?

ronnier
No, I went to class on campus every day/night.

http://www.utdallas.edu/

pbhjpbhj
You did classes day and night and had a full-time job? Can you define "full-time job" for me. Also how many years did you take to get your degree, in what subject?
SHOwnsYou
Working during college is not as daunting as it sounds.

I worked the entire time I was in school, the first year part time, the last 3 years were full time (40+ hours per week).

I graduated on time with a degree in Economics with as much of a focus I could put on Game Theory and Statistics.

pbhjpbhj
>Working during college is not as daunting as it sound

I don't find your suggestion daunting. I find it ludicrous - how does one fit in all their lectures and essay writing, tutorial assignments and work a full-time job. Did you skip lectures. As I did a modular course I had both essay assignments, tutorial assignments and lab work (programming, experiments, etc.) as well as about 30 hours contact time (lectures mainly).

I suppose if I hadn't slept and had a flexible job that I could work at when I wanted and without any hard deadlines.

Perhaps the key is the job you had, were you a life model of someone studying in a library?

ronnier
I went to the library to study nearly every night, except Friday night. I had no choice but to study, do assignment, projects and so on all day Saturday and Sunday.
SHOwnsYou
I had a real job. No sitting in the library for me. I was a jack of all trades type at my job. Some software development, but I dealt pretty extensively with strategy as well.

I had very hard deadlines all the time. My job was 8-5 every day, but I would usually have to leave for an hour or so 3 times a week for class. That didn't really change anything, it just meant that I was working later than 5pm every night and fitting classes in later.

It wasn't that hard. It helps that I don't stress about anything. But I would like to point out that I was not obsessed about my grades like some people tend to be. I carried a decent GPA through school, but nothing impressive. The nothing impressive was partially a function of my own doing and partially my heavy schedule. I was never pressured into getting great grades and never put that on myself. Mostly Bs with some As was fine for me.

ronnier
I typically went to night classes, but sometimes I had no choice but to take a mid day class, so I'd leave work, go to class, then return to work. I worked 40 hours a week. My graduate degree was in computer science, took about 1.5 years of grad classes, but more than 2 years of prerequisites because my undergrad wasn't computer science.
stewiecat
Took me just about 7 years. Had ~27K in debt.

The key for me was locking in the low interest rate when I consolidated the 8-10 federal loans I had into one big one at 4%. Made the payments automatic and threw in extra cash when I could. Once I was above the cutoff for being able to write off the interest I started tripling and quadrupling the payments.

In hindsight they should've been done with sooner, but I got into a really expensive hobby after college (long-course and ironman triathlons) which ate into my disposable income.

lutorm
I have about $60k in debt from the Swedish student loan system, which is paid back as a percentage of your income. After 15 years of graduate student, postdoc and academic staff jobs, I just this year managed to pay off more than the interest... At a normal academic pay progression I doubt I'll ever pay it off, I just think of it as a small extra tax every year until I turn 65 and the state forfeits the remaining balance. (They've since changed the system, the terms for repayment are not so generous any more.)
jakevoytko
Finding a cheap place to live is essential! My first post-college apartment was $960/month, utilities included. As a result, I completely paid $19,000 in loans 11 months on a 61k pre-tax salary. Look for apartments in safe neighborhoods that cater to fixed-income families and the elderly.

If the loan's APR is much greater than your savings account, keep a reasonable buffer and dump everything else into the loan. Otherwise you're throwing away money to interest. If you have the ability to pay into a specific loan right now, put money into the one with the highest rate ASAP.

I imagine lifestyle is a huge factor. Groceries are my only large monthly expense. If you have others, plan accordingly.

makmanalp
Even better, get a roommate and halve the price. Having a roommate doesn't really require a college lifestyle. The more people you have, the more the per person price reduces. So a big, nice place where everyone gets their own room can actually be cheaper than what you pay.
bluesmoon
I can't answer for myself (I studied in India and my tuition was $100 per year which I more than recovered through participation in software competitions). My girlfriend, however, studied in the US, and also had a 20K loan which she managed to pay off before graduating by working the regular 20 hours a week allowed to international students.
Aqua_Geek
A lot of it depends on your other obligations. If your student loans are your only source of debt and you land a decent job after graduation, I think it's very doable to pay off your loans quickly. However, if you have a car payment, credit card payments, expensive hobbies, etc and you're only making minimum payments on your loans it's obviously going to take longer.

I would recommend you find a loan amortization calculator. Most should have the ability for you to enter an additional monthly payment and see its effects on how long it takes to pay everything off.

mkramlich
I have a startup that will be doing it's part to help ensure that no student will ever have to take out college loans ever again. Early/stealth mode still, however.
il
I started my business to pay for beer and food during college. Fortunately, it grew rapidly, and I was able to pay off all my loans(about 25k in debt) before I graduated. Of course, living like a frugal college student with low expenses helps tremendously. If your startup does well, you'll be able to pay off your loans in no time.
jlees
I started university in 2000 and still haven't even started paying my $20k UK student loan back. shrug
damoncali
I haven't and I'll take as long as I can do to so. The interest rate is so painfully low that it's dumb to pay them off.
damoncali
Downvote if you like - it's simple mathematics. Money (especially government-subsidized money) is damn near free today. Rushing to pay it back at near-zero rates is foolish.
sanderjd
Don't know why people are downvoting you, what you say is very sensible and financially completely right - if the interest rate of the loan is below what you can get in interest on a nearly risk-free investment, then it is cheaper to pay the loan as slowly as possible. Having said that, I disagree with you that it is foolish to pay back loans as quickly as possible. Having no debt makes it much easier to live with no income (without having to declare bankruptcy). If that isn't something you aspire to then it doesn't matter, but I would personally enjoy that very much and will continue paying very close to the absolute maximum I can afford each month on my admittedly cheap loans.
StuffMaster
I came to the same conclusion when I consolodated into a 30 year loan. Since my loan doesn't grow much faster than inflation (if any), I won't save much by paying it early, and the monthly payment will seem smaller every year.
dangrossman
I accumulated $77,000 in student loan debt during the first three years of college, and paid for the rest (another 4 years, two degrees) directly.

I paid off that debt before any of the loans entered repayment with the income from my businesses I started while in college.

tricky
My loans were subsidized (stafford) and locked into a VERY low rate for 10 years. I could have paid them off quickly, but my plain old savings account had a much higher rate of return than what the loan cost.

It took me 9.5 years to pay them off (I got emotional and just paid off the last 6 months to be done with it.)

dmoney
About 7 years. I owed about 12K after graduation and just did the default payment (which would have taken about 16 years, but it was low). Later I borrowed another 12K or so for a car. After year 6 the car was about 1/3 paid off. At that point I read "Vagabonding" which put the idea in my head that debt could be an impediment to freedom. I got a higher paying job. By the time I got around to looking into increasing the monthly payments, I realized I had enough saved to just pay off the loans in one swift stroke.
Pistos2
I did Comp Sci at a major Canadian university. I used OSAP or a bank loan for each year of study. I've never put in a lump sum. Paying only regular monthly payments got me finishing maybe 10 or 11 years after graduation.