How This Man Paid Off His Student Loans in Two Years — And Then Began Doing It Again
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Imagine paying off your student loans in two years — and then deciding to take on yet more debt. When assistant professor and HR consultant Matthew Burr realized his choice in a master’s program prevented him from growing beyond his specialty in human resources, that’s just what he did — after paying off $74,000 in his first round of student loans.
The thought of investing more money into education after finally paying off a mountain of student loan debt may seem overwhelming. But Burr realized what he wanted and went for it, with strong results. Here’s how he managed to do it, and what his experience can teach you about managing your own student loan debt.
How to pay off $74,000 in student loans in two years Living on less than $1,000 per month to pay off student loans Taking on more student loan debt Paying off new student loan debt What you can learn from Burr’s success Some other options for managing your student loan debt
How to pay off $74,000 in student loans in two years
When Burr graduated with his bachelor’s and master’s degrees, he was left with $74,000 in student loan debt. Once he calculated the interest he was paying on his student loans each month, he decided to act fast.
As Burr tells it, he was a few months into his repayment when he started tracking the interest and discovered that it was increasing by $100 every week — and that was all the motivation he needed to start paying off his debt, fast.
Just as Burr did, you too can calculate the interest on your own student loans to see how much interest you’re paying every month, and how much of your payment is actually going toward the balance of your loan. Go to Student Loan Hero’s interest repayment calculator here.
Living on less than $1,000 per month to pay off student loans
Burr aimed to pay all his student loans off in two years, so he created a budget that had him living off of less than $1,000 per month.
Living in Northern Michigan and being able to find reasonable rent certainly helped, but so did a decision to use only basic cable, to not buy a new car when his current car was paid off and to avoid credit card debt. He then used a signing bonus at his first job and all of his tax refunds to make lump-sum payments on his debt.
Burr was paying anywhere from $2,500 to $4,000 per month on his loans — all because he decided a speedy payoff was more important to him than fulfilling any instant gratification that spending his hard-earned money would bring.
And it worked. In fact, it worked so well that he decided to write a book about paying off his debt. Burr attributes his success in paying off his $74,000 student loan debt in two years to sacrifice, dedication and goal setting.
Taking on more student loan debt
So why would someone who already paid off a significant amount of debt go back into it? In Burr’s case, he’d always wanted an MBA, and realized the work he most enjoyed involved finance and operations.
He wasn’t afraid to wade back into debt, as he already knew this was something he could manage. Thus, he pursued his MBA dream, going into $117,000 in debt for the new degree.
And so far, he has yet again been successful in paying his student loan debt off. As of April 2020, Burr has not only paid off a significant chunk of the MBA he completed in 2017, but he has in fact taken on even more debt for another degree — a master’s of jurisprudence in labor and employment law.
Paying off new student loan debt
“Thus far, I have paid off roughly $102,000 in student loan debt in 26 months and owe roughly $15,000” on the MBA, Burr said.
His third master’s degree is in progress, due to be completed in May 2021. At time of writing, Burr stated he currently has around $31,000 in debt.
“My goal is to have all debt cleaned up by mid-2021, and owe $0 on student loans forever,” he said.
He noted that he’s using the same methods he did the first time to manage his debt this time: living well below his means, avoiding other debt and paying for everything in cash when possible, keeping the student loan interest accruals as close to zero as possible and paying the higher-interest loans first (he has three loans in total). While concentrating on the higher interest debt first, Burr is using the avalanche method of debt payoff. This differs from the snowball method, which would have him focusing on paying off the smaller loan balance first.
What you can learn from Burr’s success
The principles Burr has lived by can provide lessons for all of us when it comes to paying off student loan debt:
Understand how much you’re really paying in interest. Create a budget. Learn to sacrifice and live off of very little. Avoid other forms of debt, such as credit card debt. Consider whether you want to focus on the higher-interest payments first (avalanche method) or pay off the smaller loans and move on to the higher ones as you do (snowball method).
Seeing how much interest you can save if you get rid of those student loans fast can be a real motivator. You can check out our prepayment calculator to get a better idea of how getting rid of your student loans fast might impact your overall payments.
Some other options for managing your student loan debt
Burr’s experience represents one person’s strategy for paying off student loans quickly. Here are some other options you can consider as well.
Refinancing: Refinancing often works best with private student loans, but it’s also possible to refinance federal student You’ll have to refinance with a private lender, so you’ll give up the benefits that automatically come with having federal loans, such as income-driven repayment and loan forgiveness programs. Consider all factors carefully before you take this step. If you do decide refinancing is right for you, explore your options with these student loan refinancing lenders. You can also check out Student Loan Hero’s refinancing and refinancing vs. consolidation calculators to further explore these options. Student loan forgiveness and income-driven repayment programs: Depending on the field in which you work, particularly if you are in public service or education, you may be able to get some or all of your debt forgiven. You can also look into income-driven repayment programs, which can lower your payments to as little as 10% of your discretionary income. Deferment or forbearance: In times of financial hardship, you may be able to temporarily stop making student loan payments by taking advantage of deferment or forbearance
Check out our deferment, income-based repayment and public service loan forgiveness calculators to further explore your options. Here, as well, is a guide specifically to repaying student loans for your MBA.
Shannon Insler contributed to this report
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