The Definitive Guide to Student Loans

This couple has paid off $200,000 in student loans in a year—but they've still got $450,000 to go

Amber Masters pregnant with her son, "M."
Amber Masters pregnant with her son, "M."

Amber and Danny Masters thought they would never pay off their debt. After grad school, their student loans came to a whopping $600,000, or more than 17 times the average for individual college graduates in their 30s.

Still, the couple decided to try. They set a goal of paying it all off in five years, and they've made significant progress already toward paying down the total, which is now, with interest, around $650,000.

CNBC Make It first spoke to the Masters in August 2017. Back then, Amber, a public-service lawyer, and Danny, a dentist, were focused on completely eliminating their debt by 2022. By implementing some shrewd budgeting tactics, saving strategies and old-fashioned discipline, they've paid more than $200,000 so far and are well on their way to achieving their goal.

Here's a look at how they dramatically reduced their debt burden in just over a year.

How they got into the red

Amber and Danny finished undergrad at Brigham Young University with virtually no debt at all. "We were lucky to receive scholarships, Pell Grants and the help of some family members," Danny tells CNBC Make It.

Then both of them decided to further their education. After receiving her bachelor's degree in sociology, Amber went back to BYU for law school. Danny, who earned his bachelor's in business, attended Barry University for a master's in biomedical science and Roseman University for dental school.

"Danny's master's [degree] cost about $60,000. Then each semester of dental school cost about $55,000," Amber says. "Dental school is four years. Without interest, that put his debt around $500,000."

For Amber, law school was just under $50,000. However, interest started accruing immediately, with rates as high as 7.9 percent.

Amber finished post-grad in 2015 and Danny finished in 2016. The couple's total combined debt was more than $550,000. In two years, that balance ballooned to about $650,000 with interest.

The Masters family likes to take long walks in the park.
The Masters family likes to take long walks in the park.

How they overcame denial to get started

At first, they "thought the debt would magically go away," Danny says. "We assumed we'd both have high earning potential after we graduated and it would all work out. We never looked realistically at our debt until the end."

Then they became parents.

"Our beautiful son was born my third year of law school. Having a child is not the cheapest thing I have ever done, but it is the most incredible," Amber writes on Deeply In Debt, the couple's student loan advice blog. Their son's "birth was the start of us looking more seriously at our finances, and starting to make a plan for how we were going to manage."

Amber and Danny asked for advice and were told to pay the debt gradually with an income-driven repayment plan, or even, perhaps, to give up. "We scoured the internet, talked with colleagues, financial advisers, anyone who was willing to talk to us," the couple writes. "But in the end, most people agreed there was no way we would ever be able to pay off our debt on our own."

The couple knew that not paying the debt wasn't an option, either, though.

How they're getting back to black

Amber and Danny started thinking of ways to increase their income while they were still in school. "We resolved that if we could live within a modest budget and commit to working hard and smart, we could make enough money to pay it off quickly," they write.

Amber worked full-time as an lawyer while Danny finished his last year of dental school. The couple also took on odd jobs. They sold $5,000 worth of miscellaneous items they had gathered throughout college. They took online surveys for pay and part-time jobs. They took photos for people to bring in extra cash. And they started collecting coupons.

They also started a business: A 90-day fitness and financial program meant to get people in shape, physically and financially.

"Most people agreed there was no way we would ever be able to pay off our debt on our own." -Amber Masters

Since August 2017, Amber and Danny have found new ways of cutting their spending and increasing their income.

"We'll routinely do 'spending freezes' where we'll go for a certain period of time without spending any money in certain areas of our budget," Amber says. "For example, we're about to do a 'No Spend November' where we don't spend any money on going out to eat for the entire month."

Amber is also starting a contract-review website The Contracts Counselor to earn additional income. It will facilitate "reviewing, negotiating and drafting lease agreements," as well as other kinds of contracts.

Amber Masters smiles with son, "M," after completing her graduation ceremony.
Amber Masters smiles with son, "M," after completing her graduation ceremony.

'Take the bull by the horns'

Their advice to those in debt: Take charge. Create a budget.

"Neither of us are over-spenders," Danny says, "so we never felt compelled to make a budget in school … but we also weren't thinking ahead about paying off our student loans. If we had a budget in school, we would be able to pay off our loans even faster."

He said there are many pros to budgeting. "First, it teaches you discipline. You do your best to try to not overspend in each category of your budget. Then, you can predict where your finances will be in the future."

Now, Amber says, she and Danny will occasionally sit down "with a calculator and Excel sheet and crunch numbers" in order to determine the income they need to pay their loans off in a reasonable time-frame for them.

Aside from their full-time jobs, most of their income comes from their blog, the contract-review business, speaking engagements and managing another business's social media accounts.

They still occasionally sell things around the house, though. "Our general policy is that if we haven't used it in the last year, it gets sold," Amber says.

They put about $12,000 to $20,000 toward debt each month. After taxes, 50 percent of their side hustle money goes to paying debt and the other 50 percent gets reinvested into their businesses and future ventures, like Danny's goal of purchasing a dental practice.

All of Danny's take-home pay from his full-time job goes toward paying debt, they say, and the take-home pay from Amber's job covers the couple's day-to-day expenses.

Nearly 44 million Americans owe more than $1.5 trillion in federal student loans and more than 4.2 million borrowers were in default as of 2016. Given that these issues are relevant to so many people, Amber and Danny hope to teach others what they've learned and to "raise awareness about the student loan debt crisis."

They say that, when it comes to debt, you should "take the bull by the horns."

"It is tempting to bury your head in the sand and ignore the weight of your debt," Danny says, "but you really have to lean into your situation to get a handle on it. The earlier you come to understand and manage it, the less painful and more manageable it will be in the end."

This story originally appeared in July 2017 and has been updated to reflect the Masters' progress.

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