3 Reasons Parents With Young Kids Should Refinance Student Loans

cost to raise a child

Now that I’m a mom, I want to give my children the best possible start in life. In fact, motherhood has motivated me to do better in every facet of life, including managing my money. However, the cost to raise a child often overlaps with student loan repayment.

Choosing (and paying for) what’s best for your kids can mean pushing back other money goals like student debt repayment.

So how can you balance your parent student loans with the financial demands of raising young kids? Well, you need to get creative with your student debt and look for smart solutions, such as refinancing your student loans.

3 reasons parents should refinance student loans

Here are the big reasons why student loan repayment is challenging when you have young kids – and how refinancing student loans can be a solution.

1. You have less earning potential

Earning more money and using those extra funds to repay debt is an effective payoff strategy. But for parents, it falls short.

Trying to increase income is tricky. And it’s trickier for parents juggling the demanding and expensive tasks of raising kids.

Young children are time-consuming; they require so much hands-on help that it’s almost impossible to find any spare time, let alone time to generate extra income.  This puts a cap on a parent’s earning potential, one that non-parents don’t face.

What’s more, while parents may value flexibility in their work schedules, this can be at odd with employers’ expectations. A less-than-understanding boss might see a desire to work fewer hours in-office as a lack of commitment. And the boss might cut off a parent’s path to career growth and pay raises.

Women’s careers are even more affected by having kids. While fathers see a boost in performance and pay after having children, mothers see a parenthood penalty, reports The New York Times. Mothers are less likely to get hired and paid wages equal to male peers.

How student loan refinancing helps

When your income feels stretched as a parent, you simply can’t fall back on the tried-and-true strategy of working harder and earning more. Sometimes it’s due to the inability to progress as quickly in your career because you can’t work as many hours. Or maybe you no longer have time for side gigs.

Parents also face more serious tradeoffs when it comes to choosing how they spend their time. Even if they could, many parents won’t want to sacrifice time with children to chase yet another buck. Because of this, parents of young kids can’t work as hard on repaying student debt — so they need to work smarter.

Refinancing student loans is a strategic move that can get you a lower rate and decrease interest costs. Parents who refinance have more control over student loans. And they have a chance to adjust and align student loan payments with their new top priority: their kids.

2. You can only lower the cost to raise a child so far

Then there is another popular debt repayment tip: lower expenses, cut spending, and use the savings to pay off debt.

Of course, a borrower can only cut expenses so far before they reach the floor of a reasonable cost of living. But parents of young kids will reach that limit on the cost to raise a child much faster.

After all, you can only downsize your rental so far before you’re practically packed into an apartment like sardines. And the best-laid plans to cut back on grocery costs are quickly foiled by picky toddlers or food sensitivities.

There are also brand new costs that come with kids. The biggest of these is childcare, which is at its most expensive before a child can attend kindergarten. The cost of childcare for our two young children is easily our biggest monthly expense — even more than our mortgage.

How student loan refinancing helps

Most parents’ budgets are eaten up by necessities they can’t cut back, leaving them with less discretionary income. As a parent, you don’t have as much control over your costs as non-parents with fewer responsibilities.

You do have federal student loan options, such as income-driven repayment plans or deferment. These can lower your monthly payments and ease some pressure on your budget. Unfortunately, these short-term solutions can add to your total interest costs while delaying your payoff date.

On the other hand, refinancing student debt to lower interest rates can be a smart way to cut costs in both your monthly budget and long-term planning.

You can save if you qualify for lower interest rates. You can also choose a term with lower monthly payments. Unlike other options, refinancing student loans makes it possible to do both at the same time. Use the refinancing calculator below to see how.

Student Loan Refinancing Calculator

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3. You want to start saving for your child’s future

It’s no secret that student loan payments often prevent parents from investing in their child’s future. Essentially, you can’t save for your child’s college education when you’re still paying off your own.

Among parents with student loans, financial coach Craig Dacy said the most common struggle they face is guilt.

“Many parents feel like they need to provide their children with all the things they want, and take them out to new and exciting places, all at the expense of their budget,” explained Dacy.

However, the answer isn’t to just put all your financial focus on your kids. It’s possible, and even necessary, to get creative by finding cheap or free ways to meet your children’s needs.

Ultimately, you need to create a strong financial foundation to build on — because what your kids need most is a financially secure living situation. And one way parents create that is by getting out of debt.

How student loan refinancing helps

If they can, parents should focus intently on actually getting rid of their student loans for good, rather than finding a short-term fix. When your goal is to pay off student loans as fast as possible, refinancing student loans can be a great solution.

Refinancing student loans to shorter repayment periods can get you some of the lowest interest rates. And it will hold you to your goal of quickly paying off student debt. You’ll finish repaying your student loans faster, freeing up your financial resources – which you can use to invest in your child’s future.

Refinance student loans to get back in control

The second you become a parent, your child becomes the top priority. By necessity, other goals like student debt repayment take a back seat. Your desires and focuses shift to center on your child, and your finances should, too.

But kids don’t have to set your student loan goals back — and your student debt doesn’t have to keep you from providing for your kids, either.

Be proactive about your student debt and explore options such as refinancing student loans. You have more control over your student loans than you think. Use that to get your educational debt in check with the realities of parenthood.

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