How Melanie Paid Off Her Student Debt

Sitting at her computer in the oversized studio apartment she shares with her boyfriend in Portland, Oregon, Melanie Lockert received confirmation on Dec. 10 that her ordeal was over: $81,000 in college and graduate school loans were finally paid off.

She had two reactions. The first was an existential panic. “Who am I without debt?” the 31-year-old asked herself. Then a grin spread across her face. “I started dancing and screaming in my apartment. It was such an amazing moment, and I felt incredibly happy to be done with this,” she said.

Recent college graduates might despair that their day of liberation is far away or might never come. But Lockert’s single-minded focus on demolishing her debt, particularly by accelerating her payments recently, provides a roadmap – and some hard lessons – for those facing a seemingly endless string of monthly payments.

Lockert’s path followed a zigzag pattern, which she documented in a Dear Debt blog that she started writing in 2013. Being debt-free was not her first priority when she packed up her undergraduate loans and moved from California to New York in 2010 to attend graduate school – a decision that would more than triple her total student debt. Paying off her loans required a lot of patience and sacrifice, some risk-taking, and brutal self-honesty. She concluded that she couldn’t accomplish her financial goal if she pursued a career in the field she had studied in college.

She first borrowed $23,000 as an undergraduate to attend California State University, Long Beach, where she majored in theater. She didn’t appreciate then how much interest can accrue on debt and how much it would weigh on her in the future. “You’re definitely in a bubble,” she said. After graduating in 2006, she found a job at a Los Angeles non-profit and earned around $35,000. During three years in that job, she paid the minimum on her loans, about $250 per month. She said she thought she couldn’t afford to pay more, “even though I could’ve.” She considered, but rejected, setting up an income-based repayment plan, because while it would reduce her payments, the additional interest would pile on more debt.

When she applied to graduate school at New York University in 2010, she was vaguely concerned about adding more debt to pay the $52,000 tuition for the one-year theater program. But rather than reduce her debt, she took on more. “I was stubborn and wanted to move to New York and go to my dream school,” she said.

Lockert borrowed an additional $58,000, which would cover her tuition plus $6,000 in books and fees at NYU. To pay her living expenses in Brooklyn and contain her debt, she held down three part-time jobs – as a children’s theater teacher, an administrative assistant at NYU, and a receptionist at a ballet school, where she was permitted to do homework.

In graduate school, Lockert continued paying her undergraduate loans. By the time she graduated from NYU in May 2011, she owed a total of $68,000 on her graduate school and remaining undergraduate loans combined. “That’s when I really woke up and thought, ‘I have to get this monkey off my back.’ ” She resolved to change her past strategy of making only the minimum loan payments, which had increased to $900 per month for all her loans under a standard repayment plan.

But she encountered an obstacle: she couldn’t find full-time employment in New York. After some 30 interviews over a six-month period, and too many weekends missing her boyfriend, she decided to join him in Portland. “I felt I’d given New York 100 percent, but I had all this debt and could barely pay my rent,” she said.

Portland’s job market wasn’t as easy to conquer as she’d imagined. She found various seasonal or unsatisfying jobs and worked hard to pay about $1,000 per month on her loans. She realized she would have to increase her income to make serious headway on the debt. When she started her financial blog in January 2013, she said, “I was not in a good place. I made the mistake of feeling my net worth influenced my self-worth.”

But writing the blog unexpectedly took her career in a promising new direction. She soon quit the relatively low-paying job she had found – as an events coordinator – and took a risky leap to freelance writing for financial companies and websites. The move paid off: her earnings doubled between 2014 and 2015 to about $60,000. Bigger paychecks – combined with paying only $450 for her half of the apartment rent – allowed her to accelerate her loan payments to $2,000 a month and eventually $4,000 a month. She finished off her final remaining balance by dipping into her emergency fund for a $1,500 principal payment and reluctantly accepting a $4,000 gift from her mother, who’d recently received a generous bonus at work.

With her debts now paid off, Lockert is eager to start planning for her future and saving for retirement. “It took a lot of hard work and dedication so it feels really good to be debt-free,” she said.

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