$0 Payment Owed on Student Loans! | My Student Loan Repayment Strategy


Here’s the Video Transcript:

savvy man has been knocking on my door she’s been sending me emails and she’s been blowing on my phone but the good news is that having $0 payment I’m gonna say exactly how I got $0 payment and how you can get a zero dollar payment – hi I’m Shana so l5 at Cray videos to help you eliminate debt great income and build wealth and truth be told Salameh hasn’t been beating down my door or blowing on my phone because I don’t have student loans with Sallie Mae but I do have student loans with Great Lakes but the great news is that I actually still have a zero dollar monthly payment on my fifty six thousand dollars of student loans I’m gonna explain to you exactly how I got zero dollars to loan payment on the income driven repayment program and how it’s gonna benefit me to treat my goals of being debt-free so I’m going to explain to you all of this once you hit the like button and if you hit the like button is really gonna help out my channel it allows my videos to be spread out to a larger audience and spreads the information that we all want to know to improve our finances so we can live our best financial life so I really appreciate it if you hit that like button and now I’m gonna get straight into the video and tell you exactly how a zero dollar monthly payment is gonna benefit me and how can benefit you as well luckily for me I enter college with the privilege of having the Bill and Melinda Gates Millennium Scholarship and that scholarship afforded me the ability to have ten years of education pay for completely all I had to do was attend a undergrad and they will pay up to five years of education and then for grad school they would pay two years in a master’s program and up to four years in a doctoral program if I went into a qualifying program I did exactly that I went to Howard University got my bachelor’s degree and then I went to Columbia University and University of South Florida where I picked up graduate degrees in public health and I was able to have most of my education paid for with the Bill and Melinda Gates scholarship while I was in my master’s program I student loans for the first time although the gate scholarship covered my tuition it wasn’t enough to cover my living expenses so I took out still loans then and then again thrown to summer semesters of my ph.d program I graduated from our ph.d program in 2017 and on September 25th 2019 so just a few days ago I enter repayment for the first time and the reason why I am just not answering repayment for the first time two years after graduating is because I after I graduated with my PhD I enter a postdoctoral fellowship and postdoctoral fellowships postdocs are looked at by the government as if you’re still in school so I call fi for a graduate fellowship deferment and it operates the same as if you are still in school taking classes and you don’t crew interest on your student loans so now the violent the day finally hit when my student loans went back into her payment so as I said I really took out student loans in 2009 and now here we are in 2019 originally my principal and my student loans were about $40,000 in the past ten years I have accumulated about ten thousand dollars of interest so of course I was worried about my student loans especially since I lost my job in June 2019 so I still have not been able to secure another job but student loan repayment was knocking at the door in just a few months and actually now it’s here and so I was wondering how I was going to be able to deal with some loans repayment and also be able to achieve my goals of becoming debt-free so I look at some options and I actually got help from someone that I met Bank on and he helped walk me through the process of getting onto a student loan repayment program that was right for my financial circumstances the guy that I met bent on is actually a lawyer and Laura who specializes in loans he helps people choose their repayment programs and also address any challenges that they may be facing with their student loans so based off of our conversation at think on he thought that I might be eligible for the repay program the repay program falls under the umbrella of income driven repayment programs and he was telling me that under the repay program I would qualify for a zero dollar monthly payment and the federal government would pay my student loan interest over three years so I was like sign me up how do I sign up so after think I’ll be done the phone he walked me step-by-step through the process of choosing an income-driven repayment program but during our conversation on the phone we realized that did not qualify for the repay program because I had certain loans that did not qualify and under repair you have to have only you can only have direct student loans but I had a mix of student loans that were direct and some that were not direct and so we looked at other income driven repayment options and I qualify for the income based repayment program so with the income based repayment program I still had a zero dollar monthly payment so I was super happy about that because I was a little concerned about the income piece and being able to pay off my student loans given that I don’t have full time income now although I am working as a adjunct faculty I’m only working part-time I am NOT making a lot of money and so I was kind of worried about having to spend a lot of money on my student loans on a monthly basis but luckily I qualify for the income based repayment program so I applied for the back and I’m good to go but I started to think like how is this going to affect me in the long run are they gonna get over on me with all the interest that’s going to accrue from this plan Oh on vibe ran some numbers and I realized that I actually might benefit from this in the end in September I owed about 56,000 dollars towards my student loans and that was based off of the original principle of what I took out and all the interest that had accrued over the past ten years so when my repayment date was approaching I was looking at different options for how I was going to tackle this debt also given the fact that I didn’t really have much income so I was looking at what all happens when you enter repayment and this process cause capitalisation actually occurs when you enter repayment so what that means is that all of the unpaid interest that has accrued on your Sur loans now gets added to the principal balance of your student loans so what that means in turn is that you’ll actually tell a lot more money towards your student loans in the long run because all the interest is now being added to the principal so I was looking at my options and I was thinking I don’t want that to happen but I had about ten thousand dollars worth of unpaid interest that had accrued over the past ten years and I didn’t have ten thousand dollars so I was trying to think of what I could actually do so in the past year I tried to tackle my student loans and so I’m actually made a payment of eight hundred fifty dollars towards my student loans after I pay off my car in May and so I was looking at that and I was thinking what can I do to avoid some of this capitalized interest from occurring and so because I paid about eight hundred and fifty dollars towards my student loans all of that money went towards interest back then and I remember that the federal government actually has this tax deduction that all the interest that you pay within a taxpayer actually can be ducted from your taxable income and so I was thinking that so win-win for me and so I looked at my bank account and I was like I have sixteen hundred dollars that can pay to avoid the interest capitalisation from occurring and also to benefit me in a tax deduction so I decided to made a payment of 1650 dollars towards my student loans to avoid the capitalisation from occurring or a little bit of it from occurring and also to benefit me in a tax deduction where do I stand now so now I owe a little bit less than $55,000 after paying that $1,600 towards my student loan as I mentioned I was a little worried about having a zero dollar monthly payment on the surface it seems awesome because I wouldn’t have to spend any money on my student loans while my income is low but on the flip side I would be accruing interest on a loan that has already capitalized and I really kind of clear myself back that was what I was thinking but then I started to think about it a little deeper when I have a zero dollar monthly payment and I pay a little bit towards my student loans on a monthly basis all that money can actually be applied to the principal of my student loan and when you have a monthly payment usually some of it is paid towards interest and then some of it is paid towards your principal usually at the beginning of your repayment a lot of it goes towards interest and then a little bit goes towards principal but under a zero dollar repayment program able to if I’m able to pay a little bit of money I can put all that money towards the principal so it seems like a win-win for me as long as I’m committed to paint a little something since I have a goal of being debt free one day I also looked into the different debt payoff methods so we have two popular methods you have the avalanche method and then you have the snowball method and I was trying to see which method would actually make sense for me given that I was gonna be paying a little bit extra towards my student loans even though my monthly minimum payment is set at $0 under the income based repayment program so I calculated how much I would end up paying throughout the life cycle of my loans using either one of those so in the calculation I use the zero dollar minimum monthly payment and then I added an extra payment of about $1,000 so based off of those factors in the calculation I realized that under the Avalanche method I would actually save myself a couple hundred dollars and under both methods I will still end up paying off the loan at the same time with the snowball method I’m thinking that since I don’t have a lot of income it might be beneficial for me on a mental level to actually see some smaller dips getting knocked off so within my large $56,000 student loan I actually have five individual loans under that all under the same servicer of Great Lakes but when my smallest loan is about three thousand dollars and it couldn’t feel satisfactory to have three thousand dollars get knocked off and then have this other loans remaining as I work through them and that is possible under the snowball method now if I were with the Avalanche method I would save myself a couple hundred dollars but I wouldn’t get that same satisfaction because I have a large student loan of about eighteen thousand dollars under that umbrella of you know the fifty six thousand dollars in loan so it will take me a while given that my income is low at the moment to be able to knock that one out so I’m still wearing my options as to which direction I want to go but I do know that I want to pay something extra every single month now how much extra do I want to pay I’m also not sure about that I am thinking should I be really aggressive towards my student loans and pay as much as I can I’m thinking I probably can pay about $1,000 easily every single month towards my student loans given that I don’t have a lot of other expenses currently but I’m also thinking that I could be accomplishing some other goals with the extra money that I have I could be building up my emergency fund and I could also be investing into my business the well 5 which this YouTube channel falls under and I’m thinking with my investment into my business I would get a larger return on investment because I hopefully would make a lot more money than the 6% of interest on paint on my student loans so I’m kind of weighing how much money I should actually pay should I reinvest into my business a little bit or should I not reinvest into my business and put a lot towards the loan or should I split it up half and half I’m not sure exactly which way I’m gonna go by I do know that one day I will be debt-free and having the zero dollar monthly payments actually gonna help me in the long run as long as I’m committed to paint a little bit extra towards my student loans on a monthly basis and I will get there I will be debt-free one day I’ll show you if I have a lot of questions and you want to know why and consolidate my son loans and why don’t refinance my son lows and you probably want to learn a little bit more about the decisions that I made regarding my student loans if you do want to learn more you can catch that information in this video right here and if you’re subscribed and you have your notifications turned on I’ll be able to meet you in that video thanks for watching

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