With loan forbearance set to expire, student shares how she paid off $80K in 2 years

ByMichael Finney and Randall Yip via KGO logo
Friday, August 26, 2022
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The end of the freeze on student loan payments is expected to end in a few weeks. Here's why debtors don't need to panic.

SAN FRANCISCO (KGO) -- These are anxious times for many of the 5 million people still paying off their student loans. The loan forbearance program that put payments on hold is scheduled to end in less than four weeks. But you don't have to panic.

7 On Your Side met one San Francisco woman who managed to pay off her loan within two years after graduate school.

Mari Corella has been repurposing fashions and accessories since the age of 14. She purchases old clothing at second hand stores and brings new life to them for resale.

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"I was raised by a single immigrant mom and so I was always very resourceful with my money and thinking of ways I can earn it," said Corella.

She would later graduate with a BA in art history from U.C. Berkeley.

Six months later, she received her student loan repayment letter.

"I almost fainted in the lobby of my apartment building," she said.

She would owe $40,000, and that debt would balloon to $80,000 after graduating with an MBA from the University of Michigan.

The huge debt meant saying no to friends when they asked her out to eat and not purchasing nice clothes for job interviews.

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"It was those small sacrifices that I felt were deteriorating the quality of my life," Corella said.

Leslie Tayne is a lawyer with the Tayne Law Group and specializes in helping people eliminate their student loan debt.

"Know your budget. Be aware of the monies that come in and out of your household so you can allocate certain funds to pay off your student loan," said Tayne.

If you have multiple loans, consider consolidating them into a single loan.

"You might qualify for a lower interest rate, a more stable interest rate, and lower payments. It makes it easier to pay one payment a month," Tayne said.

Those in public service or nonprofit jobs may qualify to get part of their loan forgiven.

Borrowers have until Oct. 31 to apply.

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Tayne says those with federal student loans qualify for more programs. Those with private loans have fewer options.

Corella had private student loans at 6.55% interest.

The San Francisco based personal finance company SoFi refinanced her loan, cutting her interest rate to 3.5%.

That saved her $200 a month in payments.

"So $200 a month is the difference between being able to go on vacation once a year, or being able to go out with meals with friends twice a month," said Corella.

Now working in the business end of the fashion industry, she applied her bonus toward paying off her loan, which she paid off in two years after grad school.

"I know that can't be everyone's story, but really SoFi helped me get a well-paying job with their career services. I was living very frugally but really I never felt deprived," she said.

The key takeaways are to stick with a budget and to consolidate your loans in favor of a single lower interest rate. The Student Loan Forbearance program is scheduled to expire August 31.

Take a look at more stories and videos by Michael Finney and 7 On Your Side.

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