Mandy Velez graduated from the University of Pittsburgh in 2013 with $75,000 in debt.
She calculated that if she made monthly payments as expected, she would be paying her loans until she was in her mid-50s.
She decided to pay off her loans sooner instead. She used the debt snowball method to pay off her loans sooner, ultimately reducing the high amount she’d have to pay in interest that she felt was unfair.
In the end, she paid off $102,000 in total of student loans — $27,000 more than she actually borrowed. If she’d made minimum payments into middle age, she calculates she would have paid about $96,000 in interest alone.
A few months after Mandy Velez graduated from the University of Pittsburgh with a bachelor’s degree in English and communications, she was in for a shock. She calculated that if she were to make the minimum monthly payment on her $75,000 loans every month, she’d pay them off around the year 2046.
She calculated that if she paid the minimum payment as long as her loan balances suggested, she’d have paid over $96,000 in interest alone — more than she borrowed originally. “I was like, ‘This is ridiculous,'” she told Business Insider. “There has to be a better way than taking the 20 or 30-some years that it’s telling me I would need to pay them off.'”
She had three public student loans totaling $30,500, with interest rates between 9% and 12%. Additionally, she had two federal loans, one direct subsidized student loan and one unsubsidized, totaling $45,091 at 6%. If she could pay off her loans faster, she reasoned, she could avoid having the interest add up and pay more than she had to.
She felt it was unfair that the loans that helped her earn her bachelor’s degree had such high interest rates attached. “I have always been a person who, if I feel like if things aren’t fair, I have to find a way to make them fair,” Velez told Business Insider. She aimed to pay them off by the time she turned 30, but ended up doing it in just six years, two years early.
For the full article click here: https://www.businessinsider.com/student-loan-repayment-debt-snowball-make-loans-fair
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