I recently did my taxes and found out that I paid $4,292.48 in student loan interest last year.  This number is appalling and makes me physically ill.

That is approximately 50% of what I paid towards debt in 2012.

That is close to 25% of last year’s income.

That could easily afford my dream vacation with my mom.

That is 10 months of my rent.

That is a healthy emergency fund.

When I see numbers like that I can’t help but think of derailed dreams, a postponed future and lingering in limbo. I can’t help but think how much that money would benefit me now and all the things I could do with it. Even more, I think if I were to donate any fraction of that amount, how much it could truly help other people.

How did it get so bad? When I went to undergrad, I took out $23,000 in loans at 2.5% interest rate. If I didn’t go to grad school, I could have paid that off in 3 years and still lived a reasonable life.

But I did go to grad school, something I am trying to come to terms with. Something that I am not trying to resent, regret and become a bitter part of my life. I never felt oppressed or trapped with my loans before grad school. Some time after I graduated undergrad, the student loan industry changed.

I received my 68k in Graduate PLUS loans at 7.9% interest.

I think that is just absurd. To go from getting student loans at 2.5% and within three years going up to 7.9%? It seems so cruel. Honestly, if I just had 55k in student loans left to pay back, I wouldn’t feel that bad. I know I would pay it off eventually.

But with this crazy amount of interest, it always feels like you are taking one step forward and two steps back.

When you make a 1k payment and see that $600 of that is going towards interest, what’s the point?

Sometimes it does feel like a trap.

A game that no one can win.

A cruel joke.

Now when I was 26 and signed my loan paperwork, it was very different from when I signed my loans at 17. At 17, my dad pretty much told me to sign at certain places so I could go to college. I was much more independent and aware at 26. Leaving my career for grad school was the biggest decision of my life at that point…and I took a vested interest in reading everything carefully. I remember reading about the changes in the student loan industry. I remember using the loan payoff calculators to estimate my payoff date. I remember panicking and thinking that the interest would be a lot.  At the time, I had so much faith.

Having a dream and making it happen regardless of the cost feels amazing- and that is what I did. Submitting to a disappointing reality after that dream, is frustrating, and can downright cause an existential crisis.

Although I am feeling so angry, frustrated and helpless with this student loan interest, I cannot give up. I have to play their game. I’m already 20% there in a year and half and if I give up now it will all be for naught. The more I pay, the lower the capitalized interest will be. I need to be patient, calm, positive…..and try to find that faith and hope that I had not so long ago. As my partner said, I cannot be a victim of my debt, or they have won.

I am still a person who loves, feels, has shelter and at the end of the day is supremely lucky. Although contrary to this blog, I cannot let it define me.

How do you get over extreme disappointment or deal with massive debt? Tips helpful!


Melanie is a freelance writer currently living in Portland, Oregon. She is passionate about education, financial literacy, and empowering people to take control of their finances. She writes about breaking up with debt, freelancing, and side hustle adventures at DearDebt.com.

Currently she puts more than 50% of her income towards debt, while living a frugal, fun life. In addition to her love of personal finance, art and music, she is also a karaoke master. Follow the adventure @DearDebtBlog.

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12 responses to “Student Loan Interest is the bane of my existence”

  1. I hate capitalized interest! If I go with Sallie Mae’s repayment plans, I will end up paying over 235% of what I originally borrowed! Can you say highway robbery? Too bad usury is legal with student loans! How much is too much profit? I think they’d still make a good chunk with just simple interest, get rid of capitalized interest. I didn’t understand my loans when I signed for them, didn’t know they were gaining interest while I was in school. By the time I began repayment, $17,000 worth of interest was capitalized. $17,000 is what I received in grant and scholarship money…flushed down the toilet. Nearly 62% of my payments went to interest last year! Gotta love paying interest on capitalized interest.

  2. I don’t know if you can post photos in the comments, but here’s a link to a funny capitalized interest meme. https://sphotos-a.xx.fbcdn.net/hphotos-prn1/35452_10152574429495245_670362569_n.jpg

  3. addvodka says:

    WOW! That is a LOT of interest! Not that it makes you feel better at all. But it’s motivating, isn’t it? It makes my skin crawl, but seeing that amount would make me work double time just to kick it to the curb. I freaked out when I saw $420 in interest on my car loan last year!

  4. Ouch, that’s a tough number to read. I had a similar experience where my old student loan company gave a breakdown of the principal and interest paid for the entirety of the loan, and it was pretty disgusting (though a wake up call to stop paying just the minimum). I wish I had some practical advice to disperse, but I think keeping your optimism is vital, and maybe keeping in the back of your mind that, as you chip away at the debt, the interest will decrease over time.

  5. My student loans are as high as yours but I was lucky that in the last few years, I was on “interest relief” because my income was low so the govornment was paying it. I am up for reassessment next month and pray that I will get interest relief status again but I don’t think so…. 🙁

    Massive debt sucks, but writing a blog and interacting with others in the same situation seems to help 😉

  6. I’m with Daisy, WOW that’s a lot! Keep it up though, the sooner it’s gone the better.

  7. Preach it! Am in the same boat. We can cheer each other on as we pay off the freakin’ loans!

  8. Alice says:

    Is there a way for you to increase your income? It seems like $20k in income is low for someone with a master’s degree. I have a master’s in a helping profession and the starting pay is in the high $30-low $50s in the midwest. (Clearly nothing to get rich on, but I only paid around $20k for the degree, plus undergrad. My undergrad loans were at a 3.25% and my grad loans are at a 6.8%, so I tried to pay as I go as much as I could.)

    If you picked up a side job working in a restaurant (I know Portland has a great restaurant industry) one weekend night, you should be able to make a minimum of $150 a night as a server. That’s an extra $600 a month to snowball to your debt, plus usually includes a free meal. (Just a thought, as I am not sure if your grad degree is marketable or profitable in Portland.)
    Either way, good luck! You can do this.

  9. Is none of this tax deductible?
    Leslie Beslie recently posted…Spending the Holidays AloneMy Profile

  10. Chas says:

    I paid $15,741 in interest for my two children after consolidating all the student and parent loans! One refuses to contribute and lives out of state, the other is in sales and is not yet earning commission and is living at home. What the hell do I do ?
    It’s $1311/month for 30-years!

    • Melanie says:

      Are they federal student loans? After consolidation, are you available to opt for the income-contingent repayment plan? I am so sorry you are dealing with this 🙁

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