Paying off $31,000 Student Loan Debt in Brooklyn, N.Y.

Over the last several decades, the cost of education has gone up, but wages have remained mostly the same. As students and families have had to take out bigger and bigger loans in order to afford a college education, many struggle to pay them off long after leaving campus. That’s why nearly 45 million Americans share over $1.71 trillion in student loan debt.

Where you live while you pay off your student debt can make a difference. Saving on monthly expenses like rent or mortgage payments might help you make heftier payments on your student debt. Which brings us to Brooklyn, N.Y.

If you spoke with Shannon McMahon last fall, you might have felt bad for her. Due to the ongoing coronavirus pandemic, McMahon was laid off from her full-time job. She also saw her live music performances and other side hustles come to a standstill.

But a few months can change things dramatically: McMahon found a higher-paying position in January and has benefited from the government-granted pause on federal loan repayment. She’s now planning to use her improved cash flow to zero out her private student loan balance before she turns 28 this coming October (after paying off credit card debt and a federal Perkins student loan in 2020).

And that’s not all: McMahon has promised her supportive Instagram following that she’ll extinguish her remaining federal student loan debt (currently $22,300) before age 30 — unless student loan forgiveness arrives first.

McMahon at a glance:	Ayano Hisa
● Age: 27 ● Salary: $80,000 ● Student loan debt: $31,207 ● Monthly payment: $1,000
● Grew up in Buffalo, N.Y., before moving to New York City ● Graduated from Pace University in 2015 ● Benefiting from current pause on federal loan payments, interest ● Finds inspiration from Instagram users paying off their own debt ● Saw her income from music performances, other side hustles hit by the coronavirus pandemic ● Aims to be student debt-free by age 30

What’s a day in your life like in Brooklyn?

Well, before COVID[-19] hit, I spent weekdays commuting to my job at a large music magazine. I absolutely loved every second of it. The company was a perfect match, and so was my team. In those days, I also performed my own music and [played] with friends’ bands around New York City venues after work throughout the week.

I was laid off in October and spent a couple months job searching, and am lucky enough to have found another amazing role on a great team that’s still in the music/entertainment industry, which is my main passion. I started in the beginning of January and spend most days working from home and evenings writing or practicing new songs, learning how to cook new recipes and hanging with my boyfriend and small black cat, Salem.

What are your living expenses like?

The overall cost of the [one-bedroom] apartment [we rent] is $2,650 per month, not including utilities. I split this cost with my boyfriend, [so] we each pay $1,325 a month. Our utilities — internet and electric — end up being about $160 a month, which we also split evenly.

Does your current annual salary make your student loans affordable to repay?

Yes, and I’m very lucky to finally be able to say this. It was difficult to make payments in the past because my salary was lower, and I was also paying off $17,000 of credit card debt. I decided to tackle my credit card debt first, since those interest rates were so high, and paid it off in two years, becoming credit-card debt-free in January 2020.

It was a bummer to be laid off in October, but that helped me take stock of my skill set and learn how to better negotiate my salary. Now that my salary is higher, I pay way above the minimum on my student loans.

When did you start borrowing student loans, and why?

I started borrowing because my family couldn’t afford to pay for my college education out of pocket, like many families in the U.S. Neither of my parents finished college themselves — though my mom later would go on to get her college degree while I was in college — so they were also confused by the process.

I grew up as one of six kids in a low-income family, and there was this idea within my family and culturally in America that education could help you rise above that. In a way it did: I now outearn my parents, but I’ve also got a ball and chain of student debt attached to me.

I do wish that I would’ve tried harder to learn more about low-cost college options in New York City. I think it’s predatory to make 17-year olds make these financial decisions though, especially when their parents are not in a position to advise adequately. We need better education about student loans and finance in our school systems.

When did you start repayment on your loans, and how equipped were you at that point to repay them?

I started repayment after the six-month grace period they allow you once you graduate college. I never missed a payment but also only paid the minimum. I wasn’t making very much money in my first job out of college, but I was living in a very cheap apartment with three roommates, so paying the minimum was [possible].

Then, New York announced the Get on Your Feet program, and that was a huge help when I qualified. I wish I would’ve known more about finance then, because if I did, I would’ve paid more to the loans on top of what New York was paying, and I may very well have been out of student loan debt by today.

When did you start to aggressively pursue ending your debt?

I didn’t become truly aggressive in repayment until January 2020, after I paid off my credit card debt. To be honest, I really thought I’d just pay the minimum on my student loan debt forever and die with the debt, because the number seemed so enormous.

Paying off my credit cards changed my mindset completely. I realized I could pay off a high amount of debt by breaking it down into smaller goals. Paying my credit cards was hard and lonely at times, so to keep me motivated to pay off my student loans, I started an Instagram account to join the debt-free community and reach my goal of being debt-free … It’s been a huge help! That community motivates me to be really intentional about my spending, be more aggressive in my payoff and tips me off to side hustles that can help me earn more to pay off the remainder of my student loans.

Your Instagram handle is “shesdebtfreeby30” — is that the goal?

Yes, that’s the goal. When I started paying off my credit card debt, something about giving myself a tight, aggressive goal just made it work. Once I told my friends and family, I was locked in, and it gave me the accountability I needed to get it done.

When I finished paying my credit cards off, I’m not going to lie, I was tired. That’s when I decided to create my Instagram to motivate me and to make this public declaration to make me stick to my goal. I definitely think I’m going to be debt-free by 30.

Is making extra payments still your repayment strategy right now?

I usually try to pay about $1,000 a month to my student loans — that’s for my one private student loan I’m trying to eliminate before I turn 28 in October. The balance is currently $8,900.

The rest of my loans are federal student loans, which have a balance of $22,300. Since those payments [and] interest are paused [due to coronavirus relief], I’m throwing everything I have at my private student loan, which is not paused and still accumulates interest.

Have you tried refinancing your private loan?

I actually have refinanced my private student loan. When I first took it out, it was for the amount of $10,000. I took it out through Discover. And when I say that, I truly mean my mom did it, as I was a totally clueless 17-year-old, and she did her best with what she could try to find online about private student loans when federal loans didn’t cover enough.

The interest rate on that Discover loan was in the double digits. It ballooned to $13,000, and then I decided to refinance with SoFi. They’ve been truly awesome, and I actually refinanced again with SoFi right before the pandemic hit because my credit score improved so much after paying off my credit cards. … Now my interest rate is much lower, about 3.9%.

I would not consider refinancing my federal loans ever because they come with many more protections than private loans do — this pandemic is a great example of that.

McMahon’s other loan repayment strategies

● Make extra loan payments: “I used to think that if you just made the minimum payment and never missed a payment, you were making progress on your student loans. Mathematically, that doesn’t make sense. If you can pay even $15 to $20 above the minimum, it will help you in the long run.” ● Increase cash flow with side hustles: “I’ve done pretty much everything: Babysitting, transcription, music gigs, selling my stuff on apps like OfferUp and Decluttr, participating in medical research, selling merch[andise] at concerts for bands, user testing, pet sitting and doing surveys.” ● Consider social sacrifices: “It’s much more expensive to go out with friends and socialize in Brooklyn than it is where I grew up in Buffalo. So I have to be creative about that and also say ‘no’ sometimes to activities while I’m putting down such huge monster payments to pay my student loans off early.”

● Chart your progress: “If you’re just starting to pay off your debt, try to break it off into small portions. Instead of saying, ‘I have to pay off $50,000 of debt,’ say, ‘I’m going to make it to $49,500 this month.’ I’m also a huge fan of Debt Free Charts [pictured below], which provide the same type of motivation in a creative way.”

As for your federal loans, does the current outlook lift your spirits?

It is an immense relief to know that my federal student loans will stay on pause until Sept. 31 … Hopefully I’ll have paid off my private student loan in that time and be able to focus exclusively on federal loans afterwards.

I’m also very hopeful that [the government] … will cancel some amount of federal student loan debt. I think that’s going to be a longer conversation, but I think it’s going to happen. If he forgives $10,000 of debt [per borrower], my federal loans would be paid off so much sooner.

In the meantime, are you comfortable living in expensive New York City while paying down your remaining debt?

I think I’m able to live comfortably, yes. Especially compared to the way I grew up.

When I was growing up, I was on all the programs for reduced lunch, getting many meals from a local food pantry, food stamps and having to get assistance paying for our heat in the winter in Buffalo. I’m one of six kids, and we all had to hustle from the time we were young to pay for things. That’s obviously impacted my view of what “comfortable” is, I guess.

I feel lucky that I can pay all my bills on time every month and never worry about having to ask someone or some organization to help me. Not that there’s anything wrong with that — it’s just that after growing up that way, I wanted to build a foundation for myself where I felt secure. And I do feel that way now. I probably could pay down debt and save more in my emergency fund and/or sinking funds if I moved outside of New York City and kept my NYC salary, of course. I do think about that sometimes.

But I’m a New Yorker at heart. I really came into my own here, and so many of my memories and coming-of-age experiences are in this city. As a creative person, there’s nothing like it: On any given night you can join an open mic, meet a writers’ group or go to a film screening and meet people from literally every corner of the world. I didn’t have that growing up, and it helps me keep my mind open to new experiences and new people. I can’t put a price on that.

This interview has been edited for length and clarity.