- Clarisse Sison paid off $47,199 in student loans in just 2 years.
- She couldn’t have done it without her experience working in a bank.
- Sison began making payments while still in college to avoid accrued interest.
Clarisse Sison has paid off $47,199 in student loans in just two years. To quickly pay off her debt, the 24-year-old made weekly payments of $100 and additional lump sum payments of up to $800 each month, according to records seen by Insider.
“I had the advantage of getting into it because I worked in a bank, so I already knew very well how loans worked,” says Sison, who is the author’s sister. “Even things like capitalized interest – I wouldn’t have had a clue if I wasn’t already working in a bank.”
Capitalized interest is the unpaid interest added to the principal balance of your loans. This is why student loans can take so long to pay off if you put your loans on hold or choose a lower repayment plan. Sison avoided this trap by using her experience as a banker to kick her debt repayment process into high gear.
Sison started paying her student loans while she was in school
While working at a bank, Sison learned how interest accrues for each type of student loan:
- Private loans start earning interest daily while you’re still in school or on abstention
- Unsubsidized federal loans start earning interest daily while you’re still in school or on abstention
- Subsidized federal loans do not accrue interest while you are still in school or while on abstention
Because of this, Sison paid $400 a month — about a third of his salary — for his student loans. “I didn’t buy new clothes. I never went out to eat. It was literally so miserable,” she says.
She was making weekly payments to reduce capitalized interest
Sison graduated from college in May 2020 with $31,490 remaining on his private loans and $15,259 on his federal loans. Although her federal loans did not earn interest during the pandemic payment break, her private student loans still kept her awake at night.
Because interest accrues daily on student loans, “I realized it would be more beneficial, if I made $400 payments a month, it’s better for interest if I made $100 a week,” says -she.
Making smaller, more regular payments means your daily principal balance goes down, and since interest accrues on your daily balance, you’ll be charged interest based on a smaller balance.
Sison was influenced by Dave Ramsey
“A lot of people I’ve worked with have listened to Dave Ramsey,” Sison says. Dave Ramsey is a radio show host, author, and financial personality who encourages people to avoid debt as much as possible.
While Ramsey’s advice works for some, he has been criticized for giving unrealistic advice that asks people to deprive themselves to achieve their financial goals. In Sison’s case, his advice was motivating, but didn’t leave much room for fun.
Sison says: “I had the idea that I couldn’t live my life until I was out of debt, which is quite dramatic. I don’t regret doing it, but it was a way toxic to see the money.”