How This Student Loan Borrower Went From Default to Almost Debt-Free


Credit: Sara Burgess Photography, courtesy of Heather Taylor

When Heather Taylor graduated from California Lutheran University in the middle of the Great Recession, she didn’t have an easy time looking for employment.

“It took me at least six months to find a job — 2010 was a poor economic climate all around for work — and that job paid me minimum wage,” Taylor said.

So when repayment kicked in on her $45,000 in student loans, Taylor struggled to keep up. She eventually went into default on some of her loans and ended up adding thousands more in interest to her debt.

It took years of “sacrifice, a lot of hard work and side hustles on top of a full-time job, and tears at 5 a.m. on the phone with Navient,” but she finally got her loans back into good standing and paid off a huge chunk of her balance.

Here’s how Taylor triumphed over her difficult financial situation and is on track to paying off her burdensome student loan debt in its entirety.

Graduating $45k in debt

Originally from Missouri, Taylor went to a private college in California, where she studied communications and journalism. To finance her education, Taylor accessed both federal and private student loans, including a $40,000 loan from Sallie Mae.

“There were seven loans altogether taken out for my undergraduate degree — three private loans with the highest interest rate at 8% and four federal loans with interest rates ranging from 4% to 6%,” said Taylor.

After graduation (and with student loan repayment looming), Taylor searched high and low for a job, but had trouble finding one that paid more than minimum wage. So when full repayment kicked in on her loans, she chose to postpone payments on several of them.

“By then, the loans were demanding much larger payments out of me,” said Taylor. “I deferred repayments for a long time because I simply didn’t earn enough to make the payments required of me.”

But pausing payments doesn’t stop interest from accruing, and Taylor saw her $45,000 balance balloon to more than $56,000.

Struggling to keep up with payments

With a minimum-wage job, followed by a nine-month period of unemployment in 2015, Taylor ultimately fell behind on her student loan payments.

“My ‘strategy’ was the worst possible cautionary tale — a series of deferments, making payments here and there when possible (which was never enough for the loan provider), and eventually defaulting on all three private loans,” said Taylor.

Not only did interest continue to add up, but her variable interest rates rose over time, resulting in an even larger balance. As Taylor puts it, “it was a total nightmare.”

While her debt grew, the pressure also took a toll on her physical and mental health.

“It has made me physically sick for a really long time,” said Taylor. “I have had terrible stomach issues for years because of the amount of stress this debt has put on me.”

Fortunately, she’s been able to turn her financial situation around and is starting to feel healthier as a result.

Getting student loans out of default (by paying them off in full)

One major turning point for Taylor was securing a full-time job at MyCorporation, an online company that helps entrepreneurs start new businesses. She also started freelance writing on the side, authoring a column about brand mascots called PopIcon for Advertising Week.

As she felt more secure in her income, Taylor took a unique approach to dealing with her loans — building up a series of nest eggs. After meeting a big savings goal, she would throw the entire amount at her loans.

“Much of these nest eggs would go towards paying off loans in full, rather than make minimum payments over the course of each month, which wasn’t getting me anywhere,” said Taylor.

There are a few different ways to get student loans out of default, and paying off the balance in full is one of them. But while this approach probably isn’t realistic for most borrowers, Taylor said it was right for her.

She was able to pay off two of her defaulted loans in one fell swoop and get another back into good standing. She also paid off the entire balance of two of her smaller federal student loans, making sure to target loans with the highest interest rates first to save the most money.

Making moves to regain financial control

Along with increasing her income by working a side hustle on top of her full-time job, Taylor also made other lifestyle choices that helped her to repay her debt.

For one thing, she held her spending to a minimum, relying on public transport instead of having a car and renting a room in a shared house.

“I keep my overhead expenses as low as humanly possible,” said Taylor. “It was total spartan behavior, the manner in which I budgeted and lived, and still very much is.”

She also reached out to a financial advisor she saw speak about the student loan crisis on CNBC.

“I wrote down his name and Googled him to see if he could help me out on a pro bono basis with questions I had about my loan,” said Taylor. “He did an awesome job, and his help meant the world to me.”

By increasing her income, reducing expenses and getting professional advice, Taylor was able to pull her loans out of default, slash her student loan balance and take giant leaps toward a debt-free life.

Getting off social media to maintain a positive mindset

Along with changing her financial situation, Taylor made another useful decision: She got off social media.

“One of the most absolutely grueling aspects of repaying student loan debt, especially if you’re doing it alone, is that social media is this ever-constant reminder that seemingly everyone around you has no financial problems,” she said.

Paying off debt can be grueling, as Taylor noted, and it can help your mental health to delete, or at least take a break from, your social media accounts.

“It is very hard to maintain the mindset of giving everything up when all you can see (literally — these websites exist as highlight reels) are your peers having expensive weddings, going on vacations, eating and drinking out and buying homes, while you are chained to the ground with a loan,” said Taylor, encouraging people to remember that almost all of us have challenges when it comes to money, even if it doesn’t appear that way.

“Everyone has financial problems,” said Taylor. “We just don’t discuss them out loud.”

Racing toward the finish line of student loan repayment

As of March 2019, Taylor had gotten her student loan balance down to just $13,000, which she feels confident she can repay within the year.

“What drives me is the push to take back my own life,” said Taylor. “There are so many things I want to do, see, and be with my life, but I will not get anywhere if I do not repay the debt in full and fast.”

While Taylor has had a long road of financial struggle due to her loans, conquering her debt on her own has made her feel empowered.

“[I had] no parents bankrolling me, no cosigners, no spouse and nobody but myself to dig me out of my hole,” she said. “It’s a lonely place, but I am getting there.”

She encourages other borrowers not to give up hope and to realize they can manage their debt on their own, too.

“I’ve been rowing a leaking boat for several years now and somehow always seem to make it to shore, in spite of the odds,” said Taylor. “At the end of the day, the only person who is going to save you is you.”

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