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What to Do Now That Student Debt Forgiveness is Blocked

Increase your savings. Put as much as you can in the proverbial piggy bank while the interest rate is still at 0%. Lucky for you, the High Yield Savings Account rate at Marcus is at an all-time high of 3% APY! Compare that to Chase Saving’s measly 0.1% APY. Plus, my referral link here gives my readers an additional 1% APY for the next 3 months. Meaning right now you can sign up for 4% APY return on your savings. If you’ve been saving this entire time like we have, you can get a generous monthly return on your savings. Looked at another way, this interest earned can be like adding to your income earnings. You can read my article here about why Marcus is great for short-term savings.

Limit your spending. Inflation is very high right now. Holidays are coming up. The market is down. There are so many things going on right now that the savers are going to benefit a lot during this time. I would advise what I always do, which is to curb your spending. I wrote how to reduce spending during the holidays. I collected frugal challenges for you to try. I also wrote about budgeting and how it helped us tremendously pay down my student debt! We use YNAB to budget. It has been five years, and I still check in each week to look at our numbers! You can sign up with my referral link here to try YNAB for FREE.

Know what your payments will look like. I was on a call with my sister a few weeks back. She lives in Madrid, Spain and is more out-of-touch with the current student debt situation in the States. However, she herself still has debt from her Grad School program in California, ten years ago! I was filling her in, when she said to me, “I’m just going to pretend like it’s not coming back and the 0% interest will be extended again.” My sister and I are polar opposite beings. But I was shocked to learn that she did not even know what her payments will look like when it resumes. In fact, she didn’t even want to calculate it with me. I would highly recommend the avoidance technique. I get that it’s what a lot of you need in order to mentally get by. As if life wasn’t overwhelming enough! Having to carry the burden of student debt is taxing on the psyche. Trust me, I KNOW. But the one thing that saved me from depression, anxiety, and utter madness, was the feeling that I was in control of my finances. It made me human and alive again. I proved to myself that it wasn’t up to the rest of the world how my life played out. It’s going to be easier to assume there is nothing you can do, but I promise you there is. Now is not the time to shut down and give up. It’s the time to live to the fullest. Reading this book helps.

Speak to a finance person about your options. Look, I am not a financial professional, nor do I pretend to be one. I’m just another millennial trying to be 100% me while navigating my student debt. The truth of the matter is, there are a lot of financial paths to take. Shall you pay down your student debt while it is still at 0%? Shall you invest in long-term investments and prepare for retirement because time is on your side? Shall you place everything in short-term savings accounts and then pay the loans aggressively when it resumes? Are you all on the right repayment plan? I mean, I’ve got all the questions. As always, I turn to Travis Hornsby and his team at The Student Loan Planner. Travis saved us thousands of dollars by turning us onto the correct plan. I have full faith in his team and expertise.

I hope this list of what to do now that student debt loan forgiveness is blocked was useful.

Hi there! If you are new to the space, welcome! As you may or may not know, my name is Samantha Tillapaugh and I am known as The Debtist. I graduated from dental school at 26 years old in 2016 with more than $575,000 of student debt. Upon graduation, I was told by multiple financial professionals that the smart thing to do was to wait 20-25 years for student loan forgiveness (see options here). But the decision didn’t sit well with me. The debt was a psychological burden that caused me a lot of angst, anxiety, and made me depressed. I searched for a financial planner until I found one that listened to my desire to pay back debt and supported my decision. Since then, I have never turned back. Here is my personal student loan update.

Where We Started

In 2018, I first shared my personal story with Choose FI. I then learned that there were others who struggled with the psychology of having debt. So I dedicated my spare time writing about shifting mindsets around finance, and using lifestyle choices to reach financial independence. I surprised myself in 2020 when I reached independence BEFORE I paid back my loan. At the time, I quit a job that I struggled with, even when my husband was also without work during a pandemic which we knew nothing about. But for the first time in my life, money did not dictate what I did. I followed what I knew in my gut to be right, and it was the most liberating feeling I have ever felt.

My Money Story

Money psychology is deeply rooted in the narratives around money that we were told growing up. A lot of my fear of debt came from financial traumas as a youth. In choosing to face that fear head on and tackle the debt that I was afraid of, I gained not only financial literacy, but also a confidence and understanding of money that allowed me to have more control of it. Instead of being reactive to money, I know view money as a tool to get to where we want to go financially.

An Update on Student Loan Repayment

Today, I wanted to give you my student loan update and talk about where we are at with my student loans. I just released a second podcast episode with ChooseFI which details some of the things we have done since 2018. The Ever Growing List of Things I Have Done to Get Out of a Student Debt can be found here. We started at over $575,000 when I graduated from dental school. When the pandemic hit, I stopped making my aggressive payments since we didn’t know what would happen! My husband was without a job for the rest of 2020, and I quit my job November 2020 using the FU money we saved. At the time, we were somewhere between $430,00 to $440,000. Instead of spending the money, I continued to set it aside as if we were still making payments to our debt. Student loan repayment is set to resume January 1, 2023. At that time, we plan to make one lump sum payment that would bring our debt down to $200,000!

How We Got Here

To be honest, the first step was finding a financial planner who supports your loan repayment strategy, whatever you choose. I recommend Travis Hornsby from Student Loan Planner, not just for his expertise but also because he was one of the people who paid back a massive student loan aggressively. He had to deal with student debt personally, and can speak from experience and knowledge. My consultation with him saved me thousands of dollars, just by helping us choose the appropriate repayment plan. (We were on the wrong one!)

The second thing we did was cut our spending. Raising earning is fine and all, but lifestyle inflation is real. We learned how to use a budget for the first time with YNAB. To this day, my husband and I have budgeting dates and use YNAB to keep track of where our money goes. I highly recommend the YNAB app to all new budgeters because it is intuitive and easy! This step was so crucial to our journey that I even wrote an entire course on How to Master a Budget. It’s free and available on my blog.

Third, I changed my mindset to a positive one! I first found gratitude towards my debt and money story. This is a debt that is my privilege to own. I then approached life with a growth mindset. After realizing I had a lot of learning to do around money, I poured over books and binged podcasts. I also tried to find ways to make money doing the things I love. This led me down a rabbit hole of side-hustles which include being an early morning baker, opening my own bakery, being a wholesale director, creating a dog-sitting business, monetizing the blog, and more. My love for learning hasn’t stopped. Currently I am taking a teacher training course at CorePower Yoga to get my yoga teacher license.

Our ultimate goal was this:

To be free from student loan debt enslavement by facing my fear around money head-on without allowing money to dictate our life’s happiness. We wanted to focus on our goal of financial independence, while maintaining autonomy over the present moment. We wanted to built a life around freedom, both from debt but also from job dependency. At it’s core, we wanted to be free to do what made us both happy.

My only hope with sharing my story is to help others do the same.

Thank you for being here.

XOXO

The Debtist