Refinancing for Retirement: How to Sort Out Your Student Loans

Today’s post was sent in by reader Caroline Gillard. She had read our student loan case studies, but she hadn’t seen a personal story here of how one person was actually implementing a plan to pay off student loan debt.

In addition to wanting to share her story, she also wanted to let you know that she’s not a financial advisor, and she supplied the following bio:

Caroline Gillard is a PR Specialist and a current board member of Women in Listed Derivatives (WILD). WILD is a non-profit organization that’s mission is to promote networking and relationship-building among women in the listed and over-the-counter derivatives industry through social and educational events.

Sounds pretty WILD to me. Let’s see how Caroline is handling her student loan debt.


Refinancing for Retirement: How to Sort Out Your Student Loans


Student loans are a burden for over 44.2 million Americans, with the average amount owed at $39,400. Although this may seem like a modest amount compared to some horror stories you read about, it’s up pretty drastically from the average of $14,000 just 20 years ago. Even with inflation, that’s $21,869.72 in modern dollars – still $17,500 less than the average debt load today.

Keeping in mind the constantly building interest and other seemingly random fees, it can feel like you’ll never pay off your student loans, let alone start saving for your future and retirement. While I can’t speak to the overwhelming joy that sending off the final check must bring, I can tell you how I re-evaluated my student loan situation to better myself for the future.


Strapped down by student loan debt


I happen to be one of the 44.2 million Americans strapped down by my student debt. Luckily, I spent some time in the finance industry and learned a few tidbits of advice that I can share with others looking to better their budget or gain a little financial peace of mind.

In my position, I was working alongside former floor traders, financial advisors and professors. I was lucky that I could easily ask for guidance when it came down to my personal finances, since the finance industry vets were more than happy to help.

One time, after a near death experience for my cat, I was slapped with a $1,000 emergency vet bill. I promptly issued it to a sketchy line of credit I had to set up last minute, since I didn’t even have a credit card yet. I had 6 months to pay off the debt, or else I would be subjected to the 26% interest rate.

Luckily, when I went into work the next day, my coworkers helped me pick out a credit card with no interest for 18 months, no fee to transfer the balance and no judgment for the fact that I almost signed my soul away to a creepy credit agency. Phew.

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However, that outlook changed when I told them about my student loan. Colleagues who had previously seemed unphased by any financial situation I had thrown at them were shocked when I told them how I had taken on this loan at 20 years old without knowing anything about it.

The rise in the prevalence of student loans is a generational phenomenon. My mom used to talk about how she would work during the summer months to pay off her tuition for the year. The entire year! And my dad joined the Canadian Navy to cover the cost of medical school at Dalhousie.

But in general, college used to be more affordable. Not only has the amount of the average loan balance grown (as we saw above), but the number of people taking out loans has skyrocketed, too.


Re-evaluating your budget


Along with figuring out how to best budget around my monthly student loan payment, I was worried because I wasn’t in a comfortable position to start saving for retirement.

A former floor trader from The New York Stock Exchange once said to me, “Caroline, the best tool for retirement is time. Enroll in your company’s 401(k) plan. Start saving, even if it’s just $100 a month.”

I wanted to implement his advice but couldn’t, which was frustrating. I even found myself in envy of my Nana, who’s been able to live comfortably in her twilight years thanks to the incredible savings that my Grandpa was able to accumulate for their retirement funds.

So, here’s what my actual situation looked like. I had taken out a $40,000 private student loan with a 6.25% variable interest rate from Sallie Mae. I’m sure everyone says this about their student loan provider, but I’m convinced that Sallie Mae might actually be the devil. They have no mercy for your financial situation, and will call you nonstop the second your payment is late. And if you don’t pick up, they’ll leave you voicemails. They’ll call your family. They’re callous.

To me, student loans are like icebergs. On the surface, I thought I knew what I was seeing. In reality, there is so much more that goes into it. I had been under the impression that when I had my six-month grace period to start paying off my loan, it was for my benefit.

Not realizing it, my loan had very quickly started building interest. I had just moved out of my parents’ house and into an apartment I found on Craigslist with three other roommates on the north side of Chicago.


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I was taking home $1,600 a month at my first job. I was living a minimalist but comfortable life and paying my bills on time. At this point, I had been paying my loan off for about 3 months when 2015 rolled around.  It was then that my $300-a-month payment grew to $500 per month, because I hadn’t been paying down the interest each month. That was 31% of my paycheck! And now with rent and utility bills, I was starting to get anxious.

I was forced to live pretty frugally, because even at this state, I refused to move back in with my parents. [Which is a little hypocritical. Whenever a college student asks me for advice I tell them to live at home for as long as they can.]

I eventually found a job that paid significantly more than my first job. That’s when I entered the finance industry and was able to start the conversation around refinancing my student loans.


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  • Sallie Mae was indeed an unwanted child in my life too. Very needy.

    I tried to ignore her for awhile (deferment and forbearance) but that only made her stronger as she entered the teenage years. Finally at age 17 I kicked her out of the house (in my opinion it was 12 yrs too long but I was very foolish handling my student loans (graduated with about 160k debt) and didn’t have the internet advice that is much more prevalent today. Definitely ranks as my 2nd biggest mistake in my life (first was an arranged marriage and subsequent brutal divorce).

    Variable interest rates always scare me too. Yes in the beginning you typically have lower payments but you are subject to whatever interest rate environment you are in. For a decade or a those who utilized it gamed the system and won. I’m afraid that there will now be a trend of increasing rates in the future and best to lock in rates by refinancing if you are not going for loan forgiveness

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  • A 9% increase in interest? That’s highway robbery.

    You were wise to put the time in to learn more about this and to find a way out through refinancing. Also, it was incredibly prudent to live within your means so that you could pay it back quickly instead of taking the longer term and lower monthly payment and delaying your debt pay off.

    I think one of the largest problems in this area for medical trainees is that they view all of this money as pretend money that will be easy to pay off when they are “earning the big bucks.” Little do they realize how crippling this student loan debt can be, even with a high-income.

    Good job tackling a tough problem!


  • Sallie Mae was my mistress!
    She became increasingly unwelcome in our house.
    My wife and I decided the situation would continue only 2-3 years and then she had to be gone from our house forever. I appreciate what Sallie did for me, but I really don’t miss her.

  • Bradley Nicholls

    To all who finally kick SallieMae out, here is your celebration video

  • I had about $35,000 in student loans by the time I graduated. I was fortunate to land a pretty good paying job two months after (back in July). Currently, my student debt is now around $18,000. So I had paid around $17,000 to date (only 4 months since starting my job)… Student debt is a drag, but I am happy to be making progress.

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