Personal Finance

My student loan debt

Hello everyone!

Welcome back to my blog. In the previous blog, I mentioned that my main goal was to pay off my student loan debt. So for today’s post, I wanted to explain how my debt occurred and what my pay off strategy is. 

I went to college for 4 years. I started in 2015 and graduated in 2019. For all of my college years, I did not have to pay for the tuition fees myself, because I was receiving a student grant. Every student in The Netherlands can apply for the student grant, but the amount depends on the parent’s income. When the parents have a “too high” income, the student will not be receiving the student grant. I don’t know what the maximum income was, all I knew was that I did not have to worry about it. Since I came from a low-income household I received the full grant. The money that I received in a year was more than my tuition fee, but I also had to pay for my books and school supplies with it of course. I also lived at home, so I did not have living costs that I had to pay.

For those who are wondering how much the tuition fee is in The Netherlands: when I was going to college my tuition fee was between €2.004 and €2.060 per year. The tuition fee increases each year. At this moment the tuition fee is over €2.100.

I studied International Business and Languages. A part of the curriculum was going abroad twice; once to do an internship and a second time to do an exchange program. In my junior year, I did my internship in Paris, which I really loved. Financially I did not have to worry about anything. I still had my student grant, I also received an Erasmus grant and I received some money for transportation. My internship company was paying me and also covering my transportation costs. So financially everything went great in Paris.

But then I had to go abroad again in my senior year to do an exchange program. And I decided to go to a Caribbean Island… “Why?”, you may ask. Well, I wanted three things: the sun, the sea, and the beach. During my internship in Paris, I worked so hard. I worked really hard, and it was a really challenging internship. So I thought I deserved a Caribbean Island..

I learned that life on a Caribbean Island is so expensive. And because I was not in Europe anymore I was not getting all that money that I was receiving during my internship in Paris. All I had was my student grant. And that’s how my debt occurred. I had to borrow money in order to pay for my living costs on this Dutch Caribbean Island. The maximum amount that I could borrow was still not enough. Luckily my mom was a saver and could support me financially.

Even though I never wanted to have any debt, I do not completely regret taking out a loan. I did a minor in Finance at the university. After this, I knew for sure that I would like to have a job in Finance. Besides that, I had the time of my life. I enjoyed the nice weather and went to the most beautiful beaches I had ever seen.  

After I graduated and got my degree in Bachelor of Business Administration, I was left with a student loan debt of  €6.475,80. For some of you, this might not seem a lot, but for me, it was a lot. I come from a low-income family, so the fact that I took out loans was a big deal, especially for my mom. I was so scared to tell her that I had to take out loans. Until this day she doesn’t know the exact amount. She assumed that I took out €5.000, but I never answered that question. When I am debt free I will reveal the real amount to her.

When I was taking out loans the interest rate was 0%. For some reason, I assumed that the interest rate would stay at 0%. Luckily I found out that it was not the case. The interest would be 0% for 5 years from the year you graduated. However, in The Netherlands, you do not have to pay off your debt in the first 2 years after your graduation. If you choose to wait those 2 years, you will be left with only 3 years to pay without any interest. I decided to start paying as soon as possible.

My first plan was to pay it off in 5 years. Each year I  would pay €1.300. Later I realized that I did not need 5 whole years to pay off €6.475,80. So at the end of 2020 I decided to get rid of this debt as soon as possible. My current approach is to put as much money towards my debt as possible. In October 2020 I started throwing as much money as I could into my debt. In the whole year, I paid off €3.255,80. And more than half of it was paid in the last 3 months.

So, in 2021 (God willing) I will be debt free. I know that I can do it. Each month I will pay at least €300 no matter what. I will make sure that I keep my costs as low as possible so that I can put more money towards my debt.

This is all I have for today. Thank you for taking the time to read my blog. See you next time!

Love,

Color and Coins

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