Smart Money Podcast: How the Nerds Do It: How a Student Loans Nerd Paid Off Her Debt

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.

This week is another episode of our series “How the Nerds Do It,” where we talk with Nerds about how they personally tackled the issues they write about every day. In this episode we talk with student loans Nerd Anna Helhoski about how she managed to pay off her student loans.

Check out this episode on any of these platforms:

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Our take

When Anna Helhoski was heading to college she was a lot like many other young students: She was thinking about her classes, her dream schools and living in New York City. And much like many other young students, she wasn’t thinking too much about the realities of paying for college. But after graduating, she realized the interest on her loans was starting to pile up.

It took Anna less than 10 years to repay $40,000 in federal student loans and interest. Anna was savvy about handling her loans — she called her servicer soon after graduation and was able to take on a graduated repayment plan, which gradually increases your payment amount over 10 years. This lowered her payment in the short term while she was working an entry-level journalism job. Anna was seven years into her payments when she realized her graduated loan payment was about to increase to an unaffordable amount, so she enrolled in an income-driven repayment plan that gave her a much lower payment. Eventually, Anna fully paid off her loans.

Even though Anna writes about student loans every day, there are a few things she wishes she had done differently looking back, such as weighing the cost of a public school versus that of a private school, and thinking about her major in terms of its future earnings potential.

Our tips

• Weigh the cost of public school versus private school. Public school is generally cheaper, but you might get scholarships and aid that can make private school less expensive than you think.

• Think about your major and the jobs it could prepare you for. Evaluate the cost of your degree in terms of the potential earnings.

• Understand your repayment options and how much you owe. If you can stick to the standard plan, do it. But if you can’t, then it’s helpful to know your other options.

More about student debt on NerdWallet:

How to Pay Off Student Loans Fast

Calculator: How Long Will It Take to Pay Off Your Student Loans?

How to Spot Student Loan Repayment Scams

Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected]. To hear previous episodes, go to the podcast homepage.

Episode transcript

Alana Benson: Welcome to the NerdWallet Smart Money podcast. I'm NerdWallet investing writer Alana Benson. This episode, we're continuing our series called “How the Nerds Do It,” where we talk with our Nerds about how they personally tackle the issues they write about every day. This week we're talking with Anna Helhoski, a Nerd who writes about student loans, who actually managed to pay off her loans. She's going to talk us through how she managed to do it and some important details that non-Nerds may not think to look into. Hey, Anna.

Anna Helhoski: Hey, Alana. Thanks for having me.

Alana Benson: Thanks for being here. So I'm really excited to talk to you about this because it's such an important topic. So I just want to dive right in. Can you give us a brief overview of how you managed to accomplish this huge task of paying off your student loans?

Anna Helhoski: Absolutely. And it felt really huge at the time and just continued getting bigger along the way, which is really kind of the frightening piece about it. It took me just under 10 years to repay $40,000 in federal student loans and the interest that accumulated at the time.

I graduated from college in 2010. Took my six-month grace period. During that time, interest was accruing and it capitalized and was added to my principal. That is standard. That happens to everybody. If you don't make payments during your grace period, you're going to end up with interest that has been accruing that will capitalize, and then anything moving forward will have interest accruing on interest, essentially, is what ends up happening. It's how student loans kind of get out of control. I was making some payments initially, and I realized this is more than I can handle. I enrolled in a graduated repayment plan, which basically starts your payments out a little bit lower, and then over time they'll increase, but it stays, it keeps you within that 10-year period. You're still paying off your loans within 10 years. It doesn't extend or do anything else like that.

So along the way, some things happen. In 2013, I was laid off from my news job and I end up taking a six-month hardship forbearance. Interest also accrued during that time, and when I restarted, that accrued interest was once again tacked onto my principal. About seven years into payments, I enrolled in an income-driven repayment plan. That graduated plan had finally kind of paid up, and I ended up with a much higher loan payment per month than I had been anticipating. I think it increased like $300 within a month, and I just said to myself, "This is not going to fit my budget. This is not happening." So that's when I enrolled in an income-driven repayment plan, which had at the time lowered my payments.

And then in the next few years as my salary increased, my payment amount did as well. I paid it off all at once in February 2020. Now, anyone who has student loans, or who has been following along with student loans news, knows that in March 2020, all federal student loans were paused and that has been interest-free this entire time.

Alana Benson: Oh my gosh, that is ...

Anna Helhoski: Great timing, right?

Alana Benson: That's devastating.

Anna Helhoski: You know what? I can't go back because I never could have predicted it. I could never have predicted the pandemic, first of all, and I also could never have predicted that student loans would be paused for over two years. So I'm glad that I have it off my back.

Alana Benson: It's so funny how those things worked out, but that it was just literally one month before it was paused is crazy. So let's go back to the beginning. What were your student loans for? What did you study? Where did you go to school? That kind of stuff.

Anna Helhoski: My freshman year of college, I went to Marymount Manhattan College. It's a private school on the Upper East Side of Manhattan, so that was about $32,000 a year. I was a communication arts major with a political science minor, but I had pretty quickly decided that this was actually not really the school for me, and I ended up transferring. And I transferred to a state school. College was definitely going to happen for me. It was the expectation, it was what I wanted to do, which is also a pretty crucial component.

But student loans were also the expectation. And me, like about two-thirds of all college students, needed to take on student loans in order to afford college. My family was firmly middle class. My mom had a couple master's degrees and had gone to school for practically her whole life and taught education. My dad kind of floated around, half-finished some semesters of college. He owned a trucking company, and his message was, "Do whatever you want. Just make sure that it makes you happy."

Alana Benson: So when you were picking your major, did you think about your potential earnings options or was it mostly just, "This is what I want to study, this is what I want to do," — and the thinking of balancing your future debt with your future earnings, did that play in at all?

Anna Helhoski: That was not even remotely a concept in my brain. Truly. I wish that it was. I wish that I was someone who at the time really thought like that, but I just didn't. I was one of those really obnoxious kids that was like, "I want to be a journalist," when I was 10 years old. For me, studying political science was me being practical, which is kind of absurd to think about when you actually look at how social sciences tend to play out once you graduate in the job market. And now that I read about this stuff all the time and research this all the time, it was not the most practical major or minor by any stretch of the imagination.

Alana Benson: And hey, I was a double English and classical studies major. So for years, I told people that I majored in bar trivia. So I totally understand. Sometimes you wind up in a good spot, but I certainly never knew the outcome at the time.

And I'm curious about your thoughts on this because I look back and I wonder too, if I had thought more about weighing potential earnings with weighing what I was spending to go to school, would I have made the same decision? Do you think it's worth having that conversation with kids to say, "Hey, you may end up having to pay these off for the next 20 years of your life. Do you really want to study English or journalism, or would it maybe be wise to think about other fields that could potentially make more earnings?" I don't know. Where do you fall on that question?

Anna Helhoski: It's a strange question because there's almost a philosophical answer and then the very realistic answer. So if I was just doing your average personal finance advice, I would just say, "You really need to think about your earnings. It depends fully on your family situation." That is very real. And that's probably the hardest thing, I think, for people to come to grips with. It doesn't work out for everybody. I think you do have to weigh your own family and your own financial situation with the type of school they're going for and what you're majoring in. So it really does make a difference.

However, I will also say that college is more than just job training. I think that it's also something that you have to ultimately be happy with in some way. And I'm not saying that you have to just only chase your dreams and you'll always be happy, but I don't know, it's kind of what I did. And it has made me happy. And I think it depends on how you feel about work.

Alana Benson: Was the money something that you were thinking about a lot? Were you like, "Well, I'm going to have $22,000 worth of debt just for my first year?" Or were you not thinking about the financial aspect as much? I think it's really hard for people who are 17 or 18 years old to really quantify that amount of money. At that point, they're just imaginary numbers, right?

Anna Helhoski: Totally imaginary numbers. Did not have a realistic view at all about what that really meant. I remember that when I was applying to schools, my mom really urged me, "Think about a state school. You could really lower how much you're going to be taking in loans." I was just like, "I'm going to go where I want." And that was kind of foolish. And she ended up being right.

So when it really clicked for me, about cost, actually happened in that freshman year. One month in, I knew it wasn't the right school for me, but as a communication arts major, I wasn't going to be starting to actually do journalism until my junior year. So I really told my mom, I want to apply to Columbia and NYU. And I want to transfer, 4.0. I was ready. What I didn't know was that my parents, who had recently divorced, really couldn't afford to help me. So in February of my freshman year, my mom got a call from my college saying that they hadn't received that semester's check. It had been my father's responsibility. And I would be kicked out of my dorm. And they told her that they were going to put my things on the street on East 55th Street the next day.

Alana Benson: Oh my gosh. So that's a real wake-up call of the realities of money.

Anna Helhoski: It was. So my mom put $10,000 on a credit card and took an additional Parent PLUS Loan. Those are federal loans that parents can take. Pay off that credit card immediately and started making payments on the loan. She really pretty gently but firmly told me that if I plan to transfer, I should transfer and I needed to go to a public college. So I was really crushed. And that was when I really finally understood the situation that just because I wanted something, it wasn't going to happen. Imagine that. But when you're 18, that's just not what you're thinking of.

So I ended up choosing SUNY Purchase. It wasn't my dream school; it was kind of an artsy public college. It was really funky and really weird in a New York City suburb, but it ended up being a really good choice. They had a great journalism department among the SUNY schools and a really wonderful political science department. And I could start studying journalism right away. So it ended up being the right choice.

Alana Benson: And how much did you leave school owing altogether?

Anna Helhoski: Altogether, when I got my bachelor's from SUNY Purchase after I'd also had that one year at a private college, I left school with $23,156. I looked it up. But as you might remember, I had paid off $40,000 of debt. So how did I do that? That was all due to that interest. I was able to curb some of my costs by not living on campus. I did an internship for six months where I left my campus altogether and all I was paying was tuition. My senior year I was just paying tuition and fees. And that ended up really lowering how much I ended up ultimately having to take out.

Alana Benson: OK. I'm curious about your thoughts on this. I know we obviously want to encourage kids to follow their dreams and pursue what they want to in life, and I fully believe that there is a lot of value in the arts. But do you think it's a good idea to really have a serious conversation with kids who are looking into their college choices and considering taking out really large loans and talking about the financial ramifications and saying, "Hey, you might have to pay these loans for 20 years. Do you want to do that?"

Anna Helhoski: I don't think anybody wants to pay loans for 20 years ever. But is it worth it? I think that's really the question. So it's a balance of what do you want to do and how much is it going to pay? And that's a lot more complicated than you might think. So you have to think, what is your family's financial situation? Do you have to take on loans? Are you going to have help? That will probably be a pretty big determining factor. What are earnings like in your field? Are you planning to live in a city or a suburb or a rural area? That'll impact your earnings and also your cost of living.

Perhaps most importantly, are you planning to get an advanced degree? So say you're studying classics for a bachelor's. If you have to take on debt, you might want to rethink. Or if you do have to take on debt, maybe go to a public school. It just won't be quite as expensive to get that degree. But if you're going to study classics and then get a law degree, it's probably not a bad idea. It's got pretty high economic ROI. There are plenty of majors that don't really have any kind of economic ROI, and by that we mean return on investment.

So a lot of the arts and social sciences, fine arts, anthropology, drama, these are things that tend to not recoup what the costs are overall. But generally, for the majority of college programs, students can recoup the costs within a few years or less of getting that degree. There are several tools that can help you compare data, which I think can help anybody in any situation. And I wish when I was 18 that I knew or that some of these things existed. But it's always helpful to compare data on costs, earnings and debt.

So the College Scorecard is a great one. It's a data tool from the U.S. Department of Education. There's also an interactive map of what's called price-to-earnings premiums from Third Way, and then finally the Buyer Beware tool from the Georgetown University Center on Education and the Workforce. Those are all three really great ways to try and measure your debt versus your costs versus your earnings.

It's going to be really individual to everyone. I don't regret what I did, but I think that I might have made some alterations along the way.

Alana Benson: I fully agree. I wish that someone had sat me down and said, "Hey, English major, you may want to just consider these things." There was really no educational offerings or help from my college saying, "Hey, you're entering into this field. Here are potential jobs that you could have as an English major." And I wish that I had just thought about that a little bit more before going into it. But I think it plays into what we were talking about earlier is that when you are at that age, it's really hard to comprehend $20,000, $30,000. I was getting paychecks from a sandwich shop that were $150.

Anna Helhoski: Yeah, agreed. I was also working in restaurants and be like, "Oh, well I made like a hundred dollars today." That was an incredible day. Greatest day ever. For 10 hours of work. I did it. And yeah, I could not comprehend what going to a college that cost $32,000 a year meant.

Alana Benson: So speaking of work, let's get into how you actually managed to pay these loans off, which congratulations, is a huge accomplishment.

Anna Helhoski: Thank you.

Alana Benson: So did you have to take on extra jobs? What was your strategy? Were there things that you had to miss out on? What was the process of actually paying it off like?

Anna Helhoski: So I got a job right away. That was really cool. I got a job that was totally not in my field and I only worked there for a month. And then I got my second job and that was in journalism. And that was so exciting. I was making $30,000 a year. I lived with two other people. When I got my first bill, I realized, "I am not going to be able to make my rent and buy groceries and pay for gas and afford this loan." So that was kind of a wake-up call of, "Wow, what I earn is not actually enough to pay this off right now." It was hard at the beginning. As I had mentioned, I ended up getting a graduated repayment plan initially, and that definitely helped. Calling my servicer to do that was such a important thing. I urge everyone to understand all of your repayment options as soon as you get out of school, understand how much you owe, understand what is in front of you.

So that did help to lower my payment in the immediate. I just worked that $30,000-a-year job for three years. I was doing some freelancing and stuff on the side. I had worked with a friend's audio production company, which was kind of a blast and did that. But it was just enough. I was just scraping by. I was certainly a month-to-month person. I definitely did not do the kind of maybe travel that I wanted to do. I bought a lot of, mostly by preference, secondhand clothes. I tried to watch my grocery bills as much as possible. By the time I switched to an income-driven repayment plan, I was working for NerdWallet, and I was earning a little bit more money. And I'm glad that I went on that plan. I consolidated my loans. I had a new $242 payment that I could afford.

I recertified my payments every year. That meant that I had to resubmit my income every year. That's how you stay on an income-driven repayment plan. My payments grew as my salary did. For a lot of borrowers, an income-driven repayment plan could be the best plan to start on. But because I was on an income-driven repayment plan, that set my payments at 10% of my discretionary income and my loan term had been extended, but I knew I was going to pay it off sooner. So as my salary grew, my payments grew. I was making higher payments, they were still pretty affordable, and it helped me knock down my loan principal faster.

Alana Benson: So looking back, what do you think that you did well with your loans? What do you think that you did not maybe do so well in terms of paying them off? And what's something that non-Nerds may not necessarily realize?

Anna Helhoski: I try and remember. And I try and remember this all the time, you can only make decisions based on the information that you have at the time and you being the person that you were at the time. Me at 18, I wish I had applied to more schools. I wish I had worked harder in high school and could have gotten a scholarship. Maybe attended a highly selective university like the one that had wait-listed me, but I didn't. And I had some serious difficulties at home. I wasn't in a place to perform better than I did academically. I was a solid A-minus student. So yeah, I wish that I had a little bit more drive at that time and probably could have put me in a better place. There are a lot of scholarships and things like that out there. I did end up getting a scholarship and that did help, but that was only going to be a one-year scholarship.

I hadn't even thought, what about the second or third or fourth year and how would that be affordable at that point? Do I wish that my family had had more money so I could have transferred to one of those very selective colleges? Sure. But also not. I think my life would've been different and I also would've had a lot more debt. I would still be paying off that debt. There's no question in my mind about that. It was not a tenable prospect. So in that respect, I'm glad that I did what I did.

I think it's safe to say I made some decisions that were not the best for me. And then I made some really smart ones. And I'd like to say that came with age. So I hope that it did. But I don't think that I realized how much affordability mattered. And I really would urge any parent or any student to really, really consider that. I probably should have just started at a public college and done all four years that way, or even graduated early to save money. But I did do some other things. I didn't live on campus the entire time. That helped me save money. Room and board is very expensive. I worked summers during the school year and that helped me save money. I would say this. In retrospect, I wish that I would've done more internships, and I think summer internships would've been better than spending it serving tables. But I did what I had to do at the time.

Alana Benson: What about something that you think you did really well?

Anna Helhoski: Something I did really well, speaking of internships, was I did a six-month full-time, only paying SUNY tuition, internship covering state politics in the New York State capital for a fantastic internship that I'll give a shoutout to, The Legislative Gazette. And it was a wonderful opportunity. And I came back just way better at my craft than I was when I left, when I was just a student. So I always urge anybody to really ... if that's one way that you want to think about your life after college, think about the internships that you're doing when you're in there.

Alana Benson: Yeah. And that probably set you up for success to then get a job at a place like NerdWallet and then increase your future earnings to better pay off your debt.

Anna Helhoski: Absolutely.

Alana Benson: This has been so great. I want to just ask you, at the end of the day, do you think the loan amount was worth what you got out of it?

Anna Helhoski: Definitely. It's worth it for most people. If you're at a reasonable amount, it's worth it. So long as you finish. Completing college is really critical to gaining the benefit of increased lifetime earnings that generally come with a degree. As we talked about before, it obviously matters what you study. I'm glad that I did what I did. I have a long list of policy changes I would love to see happen in higher education with loans, with the cost of college, but operating within the confines of reality, going to college, even though it meant taking on debt, was absolutely the best decision I ever made.

Alana Benson: And with that, Anna, can you tell us what your takeaway tips are?

Anna Helhoski: Absolutely. So first would be when you're making that college choice, weighing public school versus private school. Public school is generally cheaper, but you could get scholarships and aid that could make private school less expensive than you think. It really is going to depend on your individual situation. As you're thinking about your major, also think about the jobs you could get later on. Weigh the cost of your degree to potential earnings. And my best advice is this: Do the internship. You won't regret it. And finally, knowing your repayment options and how much you owe can make all the difference. If you can stick to the standard plan, try and do it. It'll be 10 years, it'll be rough, but it'll be over. If you can’t do it, then it's helpful to know about all of your options.

Alana Benson: And that's all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at [email protected]. Also visit nerdwallet.com/podcast for more info on this episode. And remember to follow, rate and review us wherever you're getting this podcast. And here's our brief disclaimer, thoughtfully crafted by NerdWallet's legal team.

Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This Nerdy info is provided for general, educational, and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the Nerds.