How a millennial couple paid off student loans ahead of schedule
The Philadelphia Inquirer
PHILADELPHIA — When it came to paying for college, Celeste Hernandez Revelli wishes she could go back in time — and tell her younger self to avoid all those mistakes.
Ms. Revelli is the director of financial planning at eMoney Advisor in Radnor, Pa., and she creates interactive plans for financial advisers to help their clients avoid the errors she made.
Ms. Revelli grew up in Voorhees, N.J., the daughter of a nurse who emigrated from the Philippines. “My mom actually wanted a career in finance, but that wasn’t a traditional career path for women there,” Ms. Revelli said. “So she became a nurse, and supported me and my brother and put us through college” in the United States.
To pay for college, her mother, a single parent trying to do the right thing, went to a local bank and took out a federal Parent Plus loan.
“What we didn’t know was how much it would cost down the road,” said Ms. Revelli, who graduated from Loyola University, a private Jesuit college in Maryland, in 2008 with $90,000 in debt.
Looking back, Ms. Revelli, 32, would have done things very differently.
“I would have researched all the options for college instead of loans — such as grants, scholarships and financial aid. Or perhaps I should have gone to a community college for two years. I would have looked much more closely at the costs ahead of time, calculated the loan repayment schedule. Now that’s what I do for financial advisers” at eMoney Advisor, she said.
When she met her husband, Tom Revelli, he had a balance of $60,000 in school loans from the Art Institute of Philadelphia.
In about a decade, the couple have almost entirely paid down their combined $150,000 in school loans. Tom, 37, has just a few monthly payments left, and in 2017, he and a partner opened Urban Village brewery in Philadelphia’s Northern Liberties.
How did they do it?
“A lot of money that we would normally have been saving went toward paying down more debt each month,” Celeste explained. She contacted her lenders and initially went on an income-based repayment plan. And after she started working, she put extra money toward her loans from a second job, which she kept until 2016.
She worked in financial services while also tending bar on nights and weekends.
“Now, every dollar that comes in to our household has a job,” she said.
She also got a higher-paying full-time job at eMoney Advisor.
“We both nearly tripled our incomes between then and now,” she added.
Prioritize
Saving was key. “We knew we’d have to save to get married in 2017, and a week later the brewery opened,” she said.
“Tom and I just only recently started going on trips out of the country together. Before, we would take road trips and other things like that, but I have always wanted to travel more and never really had the means or the time to do so since we prioritized work, helping out our families, the wedding and the brewery.”
Realistic savings
Instead of beating yourself up for not saving, “start with as little as you want — even $5 a month” to get in the habit, she said.
Another method is to consult with counseling companies, such as Student Loan Hero and PayForEd, which promotes less borrowing to start out, and budgeting apps such as EveryDollar.
“When we budget every dollar, I started using sealed envelopes for funds,” Ms. Revelli said. “For example, one envelope had student loans, one dedicated to vacation, rent, a new car, computer. Then I had a second job, so I did it in my bank account, or different accounts that allow you to name your goals. I paid off my loans in eight years,” instead of the typical 10 or 20 years.
Consult a financial adviser
Consider tackling the student loan with a financial adviser before you borrow. Some may offer help, while others may have no experience, but you should at least request a road map.
Some “advisers aren’t used to this discussion, and, typically, they don’t have experience,” said Adam Holt, founder of Asset-Map.com, a software startup for financial planners.
Know the true costs
While the median tuition and fee price for full-time students attending private nonprofit four-year institutions in 2018 to 2019 totals $36,890, 11 percent of full-time students attend institutions with prices below $15,000. And an additional 20 percent attend institutions charging $51,000 or more, according to the College Board’s latest Trends in Pricing.
Ms. Revelli stresses some basics. Even a tiny savings account will pay off in the long run, forming the habit now and auto-saving, or adding a company match, she said.