When Kimberly Hamilton went to school for her undergraduate degree, she had her family’s support.
“I had a lot of help from my family for the undergraduate part, so I actually didn’t have any student loan debt from undergrad,” she said. “But when I decided to go to graduate school, the deal between my family and I was that I would be responsible for that portion.”
To pay for her master’s degree in international development, she ended up borrowing $40,000. Because her loans were private student loans, they had sky-high interest rates, and her loan balance ballooned.
However, Hamilton was able to pay off her student loans in just three years thanks to some hard work and creative choices. Here’s how she did it.
Getting into debt
Hamilton is the first person on her mother’s side to go to college. While her father did go to college, his education was paid for through his military service, so Hamilton’s family was new to the student loan process. That meant that Hamilton was left figuring out how to pay for her master’s degree on her own.
She attended The New School in New York, a private university. To pay for her tuition and fees, she mostly relied on private student loans.
“Their interest rates were about 8% to 9%,” explained Hamilton.
With such a high interest rate, the loan balance grew over time.
How She Paid Off Student Loans
Hamilton didn’t fully understood how student loans would impact her.
“I think I was so excited about going to school, but I didn’t really have an appreciation for what the student loan debt would mean once I would graduate,” she said. “The New School’s program was fantastic. But it’s a little bit of a rude awakening when you finish school and realize you’re responsible for all that debt you took out.”
Hamilton was able to secure an internship right after school, which led to a full-time position. At first, Hamilton just made the minimum payments on her loans. But she used a calculator online to figure out how much her loans would cost her over time. The results were crushing.
“For some reason, I could swallow the initial figure I took out,” she said. “But when I started running the numbers through calculators, I found out they would cost me over $65,000 if I took the full 10 years to repay them.”
Paying down her debt
That was a harsh wakeup call for Hamilton, and she decided to aggressively repay her student loans to cut down on the interest charges. She made some lifestyle changes to free up more money to pay down her debt.
Hamilton moved into an apartment in Washington, D.C., with three roommates to reduce her living expenses.
While those things helped, Hamilton credits negotiating her salary regularly as one of the most effective ways to pay down her loan balances.
“I think I negotiated a higher salary every year that I worked,” she said. “You don’t necessarily have to change jobs to get a pay increase. If you’re working hard and consistently documenting the value that you bring to the company or organization, [you can get a raise].”
Thanks to her hard work, over time Hamilton was able to increase her payments from $500 to $1,500 per month toward her loans. After three years, her loans were entirely paid off, helping her save thousands of dollars in interest charges.
“I was really proud of myself because I think it [paying off your loans early] is really tough to do,” Hamilton said.
Despite paying off her debt, Hamilton kept living with her three roommates for another two years to save money. She used the money she was formerly paying toward her student loans to put down a down payment on a condo and to get her financial house in order.
After her experience, she is focused on helping other people take control of their finances through a new company she launched, Beworth Finance.
“I started it because I want to make personal finance more approachable and more relatable to people,” she said. “Part of the problem I ran into when I was deciding to pay off my student debt is that I thought a lot of the information out there was sort of over my head, complicated and used terms that I didn’t understand. And I don’t think that’s necessary.”
Most of all, Hamilton recommends that people face their debt head-on.
“I think part of the reason student loans can feel so stressful is because you feel like you’re not in control of the situation,” she said. “And coming up with a plan is one way to counteract that.”
For more ideas on how to manage your debt, learn how small changes can speed up the student loan repayment process.