James, 31, fell in love with the restaurant industry while working as a server in school. After talking to his managers about what it took to get where they were, he decided to get a bachelor’s degree in business administration. Once he graduated, the reality of the $100,000 in loans he took out started to set in. While the high monthly payments felt suffocating at times, he focused on improving his credit score, putting any extra money he could toward his debt, and getting a lower monthly payment by refinancing his loans to a better rate. Today he’s the assistant general manager at a restaurant and recently purchased a home with his wife.
What went into your decision to take out student loans?
As a 17-year-old high school student, I knew I wanted to go to college but didn't realize the actual cost of attending a four-year university. I had seen my two older brothers go through the process of taking out loans and figured that was just how it worked. I took out just over $100,000 in loans and didn’t receive any financial assistance or federal aid. At the time, I didn't truly understand the impact it would have on my life after school.
Were you prepared to start paying back your loans after school?
There’s a six-month grace period after college, and at that point I was still serving at my restaurant job. I got promoted in the spring of 2011 and my first “adult” paycheck coincided with my first student loan payment of $1,150. After realizing how little money I had left after paying, I felt suffocated. I thought these monthly payments would hold me back from reaching my goals for years.
What did you struggle with the most?
I always prioritized paying my loans because I didn’t want to hurt my credit score, but it often required a lot of juggling. One of the biggest lessons I learned was to call and speak with someone who could help me explore my options. If things got really tight, I could defer my government loans for a month or two, but some of the private companies weren’t as flexible. For the first couple years, I just accepted my high payment and figured that other options would be too good to be true.
You were able to get better rates by raising your credit score over 100 points. How’d you do it?
I downloaded the Credit Karma app and looked at all the things affecting my credit. I started by getting rid of small debts, like high interest credit cards. Every time I paid one of those off there was a little sense of accomplishment. It also helped me see the impact of things like one late payment from five years back. I realized I needed to get more organized. I got a notebook calendar to write down all my due dates and examined my monthly budget to see what I didn’t need. I was also motivated at work. I kept telling myself I just needed to find a way to make more money. Surprisingly, that worked pretty well! I worked toward promotions and was able to make my way. With a respectable score, I figured it was worth a shot to try and refinance. My wife and I had a baby on the way, so I wanted to get everything in order.
What was your refinancing experience like?
I was shocked at how quickly I was able to apply – it only took me about fifteen minutes to gather all the documents I needed and complete the application, and I was able to upload statements and screenshots right from my phone. I was beyond thrilled when I got approved. I couldn't believe my new payment. I went from $1150/month payments (with three different companies) to one payment of $835/month. It was a huge relief for me. After years of hard work, and our new lower payment, my wife and I were able to purchase our first home! This was something I thought might not be possible with the financial situation I was in. I'm here to say that while student loans can be a debilitating, there is still hope. If you continue to focus on improving your personal finances and get a little relief from CommonBond, you can live the life you want.
How do you stay motivated?
It can be tough when there’s a big amount ahead of you, but you have to start somewhere. Anytime I get extra money or a bonus, I throw it at it my loans. I'm looking forward to the day when I submit the final payment on my loans. I think I'll throw an obnoxiously over-the-top party for myself the day I pay them off.
This interview has been condensed and edited for clarity.