Student loan payoff update

Those of you who have been reading this blog for a long time will recognize this picture. This is the payment tracker that we used as a visual representation for how much of Brandon's student loans had been paid off. We took a square off every time we made a monthly payment. 

I haven't done anything with this tracker in nearly 3 years. I also haven't written any student loan updates since January of 2017. That's because paying off the student loans has been in a bit of a holding pattern as our lives changed a lot over the last 3 and a half years.  Now that things have stabilized a bit I've been able to take stock of the student loan situation.

First a bit of a recap for anyone who started reading in the last three years or who needs a refresher.

Brandon started flight school at Utah State University in 2004. He was encouraged to take out many student loans to pay for flight school. The majority of the loans were through private companies and the interest started accruing from day one. (I should note that I was not in the picture when this happened.)

Brandon paid quite a bit of money to the flight school. but after six years in school he'd only earned his Private Pilot Rating and his Instrument Rating. In my opinion the flight school was horribly mismanaged and couldn't be bothered to actually teach their students. Rather than continue to put money into that black hole Brandon decided to graduate with an Interdisciplinary Degree in 2010.

He had ten student loans in total. Five "small" loans. Four "giant" loans. And one "midsize."  Five were private loans and five were government loans.

Our original plan was to move to Bountiful and finish flight school at the private school there.  Twins and a bad economy sidelined that plan. Meanwhile we couldn't afford to pay the student loans so Brandon put them into forbearance (and interest continued to accrue).

In 2012 Brandon joined the Army and the loans started to come out of forbearance. We sat down and committed ourselves to paying the loans as fast as possible. (He joined the Army after the student loan payoff program ended so unfortunately we didn't qualify for that.) We put as much money as possible into paying the loans - including huge chunks of our tax refund money. When Brandon became a Warrant Officer in the Army in 2015 he started making more money each month and we were able to make double payments on the loans. In less than five years we succeeded in paying off the five smallest of the original ten loans. It looked like we might be out of debt by the end of 2020 if we kept up the momentum.

But then in 2016 Brandon had trouble sleeping which meant he couldn't finish Army flight school and ultimately led to him deciding to leave the Army. As of June 2016 I stopped making double payments on the loans and went back to minimum payments. Any extra money went into savings while we tried to figure out what was next.

Brandon officially left the Army at the end of 2016 and we temporarily moved in with his parents. I got a part time job at a ski resort while Brandon looked for a job. After a while we realized that our best career option would be for him to go back to school to be an Aircraft Mechanic. Meanwhile we took a 3 month detour for a job in Yellowstone.

Our savings, combined with an influx of cash from our tax refund, kept the student loans paid throughout 2017. But in the fall when we arrived in Pocatello for Brandon to start school we were running out of money.  Brandon received money from the Post 9-11 GI Bill for Tuition and Housing. And I eventually got a job to cover food, gas, and other necessities, but the monthly student loan payment was out of our reach financially. At first I thought we could put the loans back into forbearance, but we'd used up all the time when we'd done that when the twins were born.

So we literally had to take out student loans to pay for the student loans. Yeah. That was annoying. The only consolation was that these new loans were government ones so they had better terms than the private loans.

Those new loans helped us cover many expenses those first few uncertain months in Pocatello. They especially helped with continuing to make the minimum payments on the student loans each month. When tax time came around in 2018 and 2019 I put money from our tax refund into our savings to cover the loans for the next year. Brandon and I still weren't making enough money to pay for the minimum payments from our paychecks so it was good to know we had the money sitting in our savings account.

When Brandon graduated and started working in May of last year I was still very hesitant to pay anything other than the minimum payments on the loans. We knew we needed to buy a house (buying in Twin Falls was cheaper than renting) so we needed money for a down payment plus to cover emergencies.  And boy did we have an emergency.  Right as we bought the house Brandon lost his job. Things were pretty scary there for a bit.

Brandon got an emergency job pretty quickly, and then got a better job again within a few months.  Plus I started working part time.  So after a while our finances stabilized.

And with that stabilization I'm FINALLY able to take a look at where we are with the student loans.

We had the remaining 5 "giant" loans plus the two new "small" loans. I added up the remaining balances and divided by the new minimum monthly payment. I found I was able to take off three payment squares from our tracker.  I'd been worried that I'd have to add squares so I was pretty happy that we'd made even three squares of progress on this tracker.  Let's look at it again.

Basically if we do nothing but pay minimum payments we will be out of debt in less than 8 years. That's kind of depressing when you remember that Brandon graduated in 2010. But hey, at least we are making progress.

The picture behind the squares is a collage of pictures from the Island of Reunion where Brandon spent his mission. The original goal was that when we were out of debt we'd go on a long vacation to Reunion to celebrate. I'd still like to do that, we haven't really talked about it lately so I'm not sure if that's our "ultimate goal." Mostly I just want to be out of debt.

Eventually I'd like to get back to the point where we pay more than minimum payments, but that's not part of the plan for this year. All the scariness with job insecurity the last few years makes me want to build up our savings so that we have a good 3-6 months emergency fund before we start trying to tackle the debt.  I've learned that a few thousand dollars in the bank feels better than tossing a few thousand dollars into the ever hungry student loans.

I am also looking into refinancing the private loans. In theory we can get a better interest rate than we currently have. That should help the payoff go faster too.

Even though I haven't been doing blog updates about the student loans I have been keeping track of the numbers on my spreadsheets.  I like the visual story that the charts tell. I'm sure you are curious about them as well.

I don't feel comfortable sharing the exact amount we pay so I've blocked off the dollar amounts on the left hand side. Just imagine whatever amount makes your heart race and base the charts off that amount. 

This first chart shows the progress we've made on paying off the loans over the years.  You can see the loans grow from 2004 to 2010.  This data was a little incomplete so the growth wasn't really that drastic between 2008 and 2009, but the loans were definitely that big by 2010.  You can see the loans start to gradually decrease after 2012.  And you can see the two new loans join the bunch in 2017.  

This next chart could also be called why "Interest is the WORST." It shows the total amount we paid to the student loans each year. The depressing part of this chart is when you see how much of our payments went to interest.  In 2019 we paid a grand total of $0.99 to principle. AGH.  A lot of that interest was what accumulated while Brandon was in school at USU. It's also what accumulated when the loans were in Forbearance. And we are still paying it off. Yeah, Interest is the WORST.

This year I decided to make a new chart. This one shows a running total of what we paid each year.  So basically the total paid over all time. This was the first time I've ever added up how much we've paid total. It's a big amount. And a lot of it went to interest.

I was curious how the total amount we've paid compares to the total balance still due on the loans. So I made a chart comparing the two numbers over the life of the loans. I was happy to see that the two amounts actually met sometime in 2018. They would have met sometime in 2016 if we hadn't been thrown into a whole new life plan.

I was thinking about writing a list of things we did right verses things we did wrong with the loans. I'd love to pass on advise that we've learned from 8 years of trying to get out of debt. But this post is long enough. Maybe I'll write those things in another post in a few days. Let me know if you'd be interested in reading that.

I'm not sure how to sum this post up.  I guess I'll leave you on this note. 

Brandon and I have been very lucky that we've been able to make continuous payments on these loans for the past 8 years. Even though our progress has been slower than we'd like it has been continuous. The loans are getting smaller. We will eventually be out of debt.

But many people have not been as fortunate. Many people have not been able to pay their loans and the interest continues to accrue.  That very well could have been us if Brandon had not joined the military or if we didn't get large tax refunds due to having 4 children.

Maybe those people should have known better than to get into so much debt at such a young age. But remember, everyone was telling college kids to take out loans. And the student loan companies let them. Nobody stopped to consider that these kids had no life experience, no real collateral, many weren't even pursuing degrees that would lead to well paying jobs. Nobody stopped to say "hey this seems kind of risky. Maybe we shouldn't loan 20 year olds this kind of money."

The money was loaned and it has saddled an entire generation with a huge amount of debt - including Brandon. Every time I make a payment I can't help but wonder what else we could have done with that money.