How to Pay Off $150k in Student Loan Debt

Six-figure student debt is mind blowing. When you're a student who receives a gap and gown but now face a student loan balance of $100k or more, the standard 10-year federal repayment plan is not a right way to battle this debt.

Finding ways to pay off your student loans faster can make all the difference if you try different debt payment strategies.

So how are millennials battling 100k+ in student loan debt? I wanted to find out.

Today, we learn about Ava, a consultant with over 150k in student loan debt and consumer debt but she has a plan to pay off them, quickly. I was happy to let Ava share her story for our student loan success stories segment.

Let's drive right in.

Meet Millennials Series with Ava: Now Let's Talk Money!

Hi, I’m Ava. (Full disclosure: I’m posting under a fake name. The main reason for this is I’ll be talking about very personal, sensitive topics about my life and my family. I would need to sensor much of what I post if it wasn’t anonymous.)

I’m a 31 year old Consultant. I have an undergrad in business and an MBA in Finance. I recently got married and moved out west from the east coast to start a new life with my husband and our doggie baby.

I started a personal finance and lifestyle blog over at millennialmoneychallenge.com (no longer live).

On the blog, I talked a bit about my background, my childhood, and how I came to owe 160k in student loans by age 25.

Before you judge me for the outrageous loan amount, let me explain how I got to that point.

Be forewarned, my story is pretty unusual. Only close friends know the full details of my background, mainly because it’s hard to believe and I worry people who don’t know me well will think I’m making it up.

You can skip ahead (it's a long read) to see how I plan to pay off student loans here.

My childhood

I was born overseas into a fundamentalist religious cult and spent the first 16 years of my life living in over 10 different countries, while my parents and other cult members tried to spread the group’s weird version of Christianity to the world.

I’m a US citizen, but up until 16 I had never been to the US.

The group was founded in 1976, and initially spread a message of salvation, apocalypticism, spiritual “revolution” and happiness, as well as extreme distrust of the outside world, which members called “the System”.

This environment was not at all conducive to raising kids. My childhood and that of my 6 siblings was extremely difficult. We lived in abject poverty in communes around the world and grew up in an extremely restrictive and oftentimes abusive environment.

Most of us had zero formal education and limited connection to relatives or people outside the group. We were required to memorize Bible verses and read the group founders’ writings for hours and hours a day. This brainwashing (in a sense) took the place of formal education and was how many of us learned to read/write.

Instead of being in school or enjoying our childhood, our days were usually spent cleaning, cooking, doing laundry and other chores for the group members. We also spent hours every day proselytizing for the group to spread the religion, as well as going door-to-door asking for donations (i.e. begging for money) from businesses or homeowners.

No one in the group worked for their money: they survived off of donations that people sent, falsely believing that the group members were Christian missionaries doing humanitarian projects around the world.

There were harsh punishments and frequent beatings from adults if we didn’t do as we were told. There was an unusually high occurrence of child abuse within the group. Not every adult was abusive, but many were.

The group was investigated multiple times for child abuse by Child Services in numerous countries, as well as by the FBI in the US.

Group members, including my parents, referred to these investigations as “religious persecution”. We were all trained on how to react and what to say if anyone asked what our life inside the group was like.

I stayed in the group up until about 14. Around my 14th birthday, I’d had enough and packed my things and moved out to live with a close friend my age.

I lived with my friend for almost 2 years before moving alone to the US. Looking back, I get goosebumps thinking of myself as a naive 14-year-old girl, on my own for 2 years in a 3rd world country, without any adult guidance or supervision.

I didn’t have much contact with the group or my parents for these 2 years. Leaving the group meant I was an “outsider”, and I was viewed with a mix of distrust and disdain.

Since I wasn’t in school, I worked several part-time jobs to pay for living expenses as well as to raise enough money for a one-way plane ticket back to the US.

Starting a new life after the cult

I have an older sister who by all accounts saved my life, and is the reason why I’m a well-adjusted, successful adult after everything I went through. 

She had left the group several years before, moved back to the US, and was working 2 jobs to make ends meet while trying to get her GED.

It was because of her that I when I moved to the US at 16 I had a safe place to live while I finished high school.

She also motivated me to apply for and go to college, no matter what the cost. I didn't know at the time that there were free colleges in the US. However, she was the reason I was able to get an education and drastically improve my quality of live.

When I first moved to the US on my own at 16 years old, I knew no one aside from my sisters and a few relatives.

It was a very isolating and scary experience on the one hand, but on the other, I was SOOO elated to be free of the cult!

I imagined myself in 10 – 15 years as successful and happy, and could not wait to get to that point in life no matter what the cost!

I knew nothing about why personal finance is important, but I had worked since 14 and paid for all of my own living expenses.

Right away after coming to the US, I got two minimum wage jobs to make ends meet. I also somehow managed to enroll in high school even though I had no proof of ever having had an education.  

Getting through high school

Academically, I excelled in high school. I made friends and joined clubs. I tried to be a normal teenager and didn’t tell anyone, not even very close friends I made, about my background.

I blended in fairly well, aside from the fact that my friends and teachers thought it was a bit odd that I had lived abroad all my life, that my family lived in another country away from me, that I lived with my sister who was a teenager herself, and that I worked so much outside of school (I often worked the night shift at the store I worked at and didn’t get home till 4 am).

I worked around the clock in high school to pay for bills, food, living expenses, a cell phone, and phone cards to call my siblings overseas. I was also trying to save up money for my first car, and save up for college applications, etc.

I worked as hard as I could academically to cram many, many years of missed education into 2 years of school, and somehow I graduated with Honors, almost at the top of my class.

I was very proud of this achievement, especially since I was the first out of my family to graduate high school.

Attending college and getting into student loan debt

My sister encouraged me to apply for college and get one of the best degrees to get to secure a high paying job. Neither of us were sure how I was going to pay for it since I would be the first person in my family to attend a full time university.

It was important for me to not attend community college. I was under the impression that my education wouldn’t be worth much if I started at the community college level and then transferred into a 4 year school. Looking back I can appreciate what a big mistake that was. For someone like myself with zero money or parental support, community college would have been the smart choice financially.

I applied to expensive private universities because I mistakenly thought a public university wouldn’t translate into a high paying salary.

The school I chose to attend had an annual cost between 25-30k. I chose to live on campus for all 4 years. I didn’t want to live alone off campus (I couldn’t live with my sister anymore), and I wanted to make friends because I really had no other support system. To this day, I could just kick myself looking back on the financial impact of these choices. I really had no idea what I was getting into!

Since my parents did not pay taxes while living abroad, I had no proof of our low (barely existent) income. Since I was still technically a dependent at 18, I only qualified for high-interest private student loans.

I got two jobs to cover living expenses and books, but even while working 30 hours a week through school, I graduated with 75k in student loan debt. The fact that my private student loans were all unsubsidized certainly didn’t help.

Attending grad school meant even more debt

I graduated in 2008 at the height of the financial crisis. Jobs were scarce, and I was convinced that my long-term career prospects were grim with just an undergraduate degree. I was also sure that the entry level salary I commanded at 35k would never be enough for me live on and pay off my hefty student loans.

Of course, my solution for this was to go back to school and rack up even more student loan debt!

I went on to get MBA in Finance, also at an expensive private university. While in school, I made another big mistake of deferring all of my student loans. Because all of the loans were unsubsidized and private, I continued to rack up staggering amounts of accrued interest.

Even though I worked two jobs in high school, almost full time in college and through my MBA to support myself, by the time I got done with school for good I had 140k in student loans.

On the one hand, I was extraordinarily proud of myself from graduating with both my undergrad and masters, coming from a background with almost NO formal education.

On the other hand, I was terrified that I would never pay off this crushing debt.

But wait, there’s more! All through school, I drove complete beater cars. No joke, in grad school, I bought a car for 250 bucks off sites like Craigslist. It amazingly lasted for over a year, but I did keep AAA on speed dial. The stupid thing was always breaking down on my way to class or work.

I decided when I graduated that I would never be taken seriously by any employer unless I drove a newer vehicle.  I went out and financed a brand new 20k car. At the time, I was pretty pleased with myself and actually thought I made a wise investment and didn't know how much car I could really afford.

So at 25, I had managed to rack up 160k in debt. My heart still stops a beat just thinking about it!

Living with six figures of student loan debt

Fast forward about 5 years later, and I’m now a successful consultant. The car is paid off, however, I still have 111k worth of student loans.

My goal is to pay off ALL of my debt ASAP.

Living with a mortgage sized amount of student loan debt has been an overwhelming experience.

At times, it’s been an emotional nightmare that I would never wish on my worst enemy. I’m determined to get rid of this debt once and for all, and to do it in 18 months or less.

Current income

I currently earn 141k, including salary and bonus, from my full time job. I’m also hunting for gig economy jobs to pull in extra income.

I’d like to generate 20k extra per year, but we’ll see what’s feasible, given that I travel quite a bit for work.

Current expenses

Mortgage:

I bought a house recently on a 15 year payment plan at a 2.5% interest rate.

Since I’m paying double, the mortgage payment plus HOA, property tax, insurance, etc, is about 15% of my after tax salary.

Student Loans:

Student loans are my second biggest expense at 12%, without increasing the monthly payments.

By the end of the year, I will be down to 70k in student loan debt from 111k.

After that, I’ll be paying the remaining 70k off in 12 months!

Bills/Utilities:

I spend about 4% on utilities/bills.

Food:

My food bill is about 5%. There’s a lot of room here to cut down significantly by using receipt scanning apps or cash back apps. which I plan to do over the next few months.

Family:

Aside from the above, I currently spend 16% on family. I partly support my younger sister, who left the cult several years ago.

I also support one of my older sisters. She has a severe mental illness and wouldn’t survive without the support.

I post more on my blog about why I do this, even though it hinders my ability to get ahead with paying down debt faster.

At this point, it’s non-negotiable to me that I support my younger sister while she gets on her feet. I’ll probably support my older sister for the rest of my life or hers.

Emergency Fund:

I have an emergency fund that covers 6 months of expenses. I’d like to increase this to 8 months.

Retirement Accounts:

I’m also maxing out my 401k right now.

My plan is invested in the low-cost Vanguard Star Fund through Vanguard.

The fund aims to create a balanced portfolio that can create steady returns which I love because of the extremely low expense ratio.

Ways to be better with personal finance

Over the past 5 years, I’ve read every personal finance book, article and blog I could get my hands on.

My relationship with money has changed. I am far wiser now when it comes to living frugally, avoiding debt, saving and investing.

What I wish I knew before

Looking back there are a million things I could have done to avoid getting into this kind of debt.

I could have gone to community college for 2 years or at the very least applied to a much less expensive school! I could have picked schools that offered more scholarships and student aid.

I could have worked full time and attended school at nights part-time.

In hindsight, I also wish I had emancipated myself legally from my parents immediately after moving to the US, but I didn’t even know this was an option at the time. If I had done this, I would have been considered an independent, and would have qualified for much better financial aid options.

I wish I would have focused on learning about personal finance, as a priority, after I left home at 14.

I was completely on my own and dying for direction on how I could turn my life around. If someone had put a personal finance book in my hands, I know I would have soaked the information up.

Important financial achievementents

Even with all the mistakes I’ve made, I’m incredibly proud of what I’ve achieved so far financially – I have my own house (it’ll be paid off in 14 years), I earn a decent salary, and I’m slated to pay off all my student loans in 18 months.

But by far, my most important financial goal was always to help my siblings out while they transitioned from the cult and tried to create better lives. Having the financial means to do that is incredible. I’m very grateful that I’m in a position to do so, even though getting here was painful at times.

Long term financial goals

My goal is pay off all my student loan debt!

My short term goals for the next 18 months include:

• Paying off ALL of my student loan debt
• Keeping 8 months of expenses saved in an emergency fund
• Maxing out my 401k
• Continuing to pay down the mortgage at a 15-year payment rate (current pay off date is July 2031)

My long term financial goals are to:

• Save between 50-70% of income after tax.
• Reach a net worth of 500k by 35 (in 4 years). This is total investments and cash plus equity in the house minus the mortgage.
• Reach a net worth of 1.8 million by 40.
• Reach a net worth of 4 million (including the value of the paid off house) by 45.
• Technically, I could retire well before 45 at this rate, but I’m hesitant to retire before then given how hard it was and how long it took to get to this place in my career!

Side hustles

Right now, I’m searching for a good side hustle! I’ll let you know what / if I find anything. It’s hard to have a side job when you travel so much for work like I do.

Summary

Over the next 18 months I’ll be focusing on how AMAZING it will feel to wipe out my student loan debt. That enough is motivation to continue no matter what the short term pain.

Thinking back, if money was no issue I would have been a travel writer. Growing up, I’ve traveled the world (one of the few benefits of my childhood), and lived in over 10 countries. I LOVE to travel – I swear it’s in my blood. I love writing too, so if money wasn’t an issue, I’d be all over this as a career option!

But you live and you learn. Here's to paying off that massive amount of 150k in student loan debt once and for all. I hope you enjoyed my story!