Student loan repayments resumed last week after a three-year pause. Interest on federal loan started to accrue again last month.
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Some people welcomed the hiatus in order to temporarily divert resources to other expenses. One local woman used that time to buy herself financial freedom.
Gosia Grzych and Arlen Guerrero loved to travel. They were on vacation in the summer of 2022 when it occurred to Guerrero that the couple should reevaluate their priorities.
"I said, 'What are your thoughts on paying off your student loan by the end of next year?'" Arlen said.
Grzych had been sitting on a mountain of student loan debt, about $126,000, from her days at DePaul University. Arlen gently suggested it was time to rethink that approach, and Gosia was skeptical to start.
It went from normal, defensive, almost shameful conversation to 'okay, let's just look at what you haven,'" Guerrero said.
"When he wrote it out, he was prepared as usual, and I was like, 'Oh!' Logically, it made sense." Grzych said.
The couple continued to share the cost of groceries and household expenses, but Grzych would use some savings and the majority of her income working at Equinox to pay down her debt while Guerrero temporarily covered their rent.
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"This was a very short term release of her independence for me to help her become financially literate, independent and empowering who she wants to become," Guerrero said
Dinners out became dinners in and vacations became staycation. Even with Guerrero's help, it wasn't easy.
"In the beginning, it did feel like a mountain," Grzych said. "I think this is why people don't even take a shot at it. You get your paycheck... and literally it's gone two seconds later."
Grzych shared her goals on social media to hold herself accountable. Slowly she made progress.
"I think about halfway through, when I started getting credit card envelopes in the mail, when my credit score started going up, and I was like, 'Ooh, I am making a dent in this.'" Grzych said
By the end of this month, Grzych expects she'll have slashed her student loan debt down to $20,000. And in the process, she has racked up a wealth of knowledge.
"But more importantly, that I can be financially literate and that I can save," Grzych said. "If I'm able to make these aggressive payments, I can make healthy financial choices."
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Chicago-based Financial expert Craig Bolanos of "Wealth Management Group" provided some tips for paying down student debt:
- Enroll in an Income-Driven Repayment Plan - Under these programs, your monthly payment will be limited to between 10% and 20% of your discretionary income, based on your family size and the type of IDR plan you choose.
- See If You Qualify for Student Loan Forgiveness - If you have federal student loans, you could be eligible to have some or all of them forgiven through certain debt forgiveness programs.
- There is also an option for Public Service Loan Forgiveness. Public servants, including government and nonprofit workers, may be eligible to see the remaining balance of their federal student loan debt forgiven after 10 years of repayment through the PSLF program. You can use Federal Student Aid's PSLF Help Tool to see whether you work for a qualifying employer and generate your PSLF form.
- Consolidate Multiple Student Loans Into One Payment - There's no fee to consolidate your federal student debt into a Direct Consolidation Loan, and you can apply on the FSA website.
- Refinance Your Student Loans at a Lower Rate - A Lower interest rate can potentially help you pay off debt faster or reduce your monthly payments. Locking in a low rate may also save you hundreds - or sometimes thousands - in interest charges.
- Explore Deferment or Forbearance - Student loan deferment or forbearance won't help you pay off your debt faster, but these strategies may be helpful for borrowers who are struggling to manage their monthly payments.