How to Crush Student Loan Debt While Raising a Family

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Raising a family comes with a variety of challenges and can put a financial strain on any budget. Throw in college loans to repay, and anyone with dependents can start to struggle.

If you already have a family and are still paying off your student loans, you know this reality all too well. It can feel overwhelming to balance both a responsibility as a parent and an obligation to repay debt.

But it’s not an impossible task. Take a step back and a deep breath, then dive in below. Get actionable ideas on how you can make the most of your finances to take care of your family and your student loans.

Create a plan (and a budget)

The first step to make the most of your finances? Make sure you’re tracking everything and ensure that the way you use your money lines up with your priorities.

If you haven’t already, track your spending and establish a budget. Prioritize your cash flow around your fixed necessary expenses, like housing costs, bills, child care, and student loan payments.

Then, fill in your required-but-flexible expenses. These are line items like groceries and transportation. You need to purchase them, but you have some control over how much you spend.

Understand that discretionary spending, like travel, vacations, shopping, and entertainment may not have a place in your budget right now. That’s what it means to line up your spending with your priorities.

Your family always comes first, of course. You want to make sure you meet the needs of the people that depend on you. But your student loan repayment should be next on the priority list.

As long as you hold on to that debt, a chunk of your cash flow goes toward a monthly payment. You’re tied to your loans and that can limit what other financial goals you can reach.

If you can prioritize paying off your loans, you’ll fast-track yourself and your family to more financial freedom. That’s worth cutting some of the “wants” out of your budget for a little while.

You need to get strategic with the way you pay off student loans, too. Here are a few ways you can get organized and maximize your efforts:

Choose the right repayment plan and tax strategy

If you have federal student loans, choosing the right repayment plan can make a big difference.

“Income-driven repayment plans can be helpful in that borrowers can make payments based on their income and family size,” explains Adam Minsky, a student loan lawyer in Boston.

“But the plans do not take into account monthly expenses, which (when you’ve got a family to care for and every penny counts) can make even the most generous income-driven plans difficult to afford.”

This is why plans like REPAYE might not work for your family. This plan bases your payment off your and your spouse’s income, regardless of how you actually file your tax return.

Look at other options that allow you to strategically file your taxes. If you and your spouse file individually, plans like IBR base your payment on your income alone.

That could make student loans more manageable since your monthly payment could be lower.

Take advantage of your tax situation

In addition to filing the right way to maximize your repayment plan, make sure you take advantage of tax credits or deductions. See if you qualify for the following tax breaks for families:

  • Dependent exemption: You can claim one exemption per person you claim as a dependent on your taxes.
  • Child tax credit: This credit allows you to reduce your taxable income by up to $1,000 per child under the age of 17.

Talk with your loan servicer

Regardless of whether you have federal student loans or private, talk to your loan servicer if you struggle to make payments. Your servicer can work with you to provide resources or look at repayment plan options.

You may get to change up your payment schedule or monthly payment amount. Your servicer can explain courses of action for drastic situations, too, including forbearance.

“You may turn to forbearance as a last resort,” says Minsky. “That can postpone payments and avert default.”

Minsky stresses that this shouldn’t be your first choice, but it is an option. The downside, he explains, is that forbearance leads to major balance increases due to ongoing interest accrual.

Find flexible ways to earn more

There’s only so much money you can save, especially when you have other mouths to feed. Caring for your family is a top priority, but the expenses add up and there’s not always a lot of extra financial fat to trim.

One of the most powerful ways to improve your financial life is to earn more money. Amy Beardsley was a single mom when she went through school, and says she took out student loans to help pay for the costs of raising a child.

“My student loans had to pay for daycare for my little one, Christmas presents, diapers; all that jazz,” Beardsley explains. “When I got out of school, I actually got a decent job in my field. But I still had to use credit cards because a lot of my money went to student loans.”

Caring for her family while continuing to pay off student loans is a challenge. She works to overcome it by running an online business.

“I started a freelance writing business early this year to help earn extra and that’s helping,” Beardsley says. “It is tough working that in addition to full-time work,” she admits, “but it’s doable.”

Prioritize and focus on your goals

Beardsley says she’s also a huge Dave Ramsey fan. She and her family use his advice to create and keep to a strict budget. “A budget is the only way to go,” she advises, and notes that it does require sacrifices to make it all work.

Her family doesn’t go out to eat often and keeps a low grocery budget by sticking to simple means. They try to find entertainment options that are free or extremely low-cost.

But these frugal habits are “totally worth it,” she says. “We just decided one day that it was enough. We cut up all our cards and now if we can’t pay cash, it doesn’t happen.”

That dedication to her financial goals has resulted in paying off $24,000 in credit card debt. But it hasn’t been all work and no play.

“Every time we pay off a debt we do something to celebrate,” says Beardsley. “We go out to a movie or a restaurant, or we buy something we’ve saved up for.”

Interested in refinancing student loans?

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1 Important Disclosures for Laurel Road.

Laurel Road Disclosures

  1. VARIABLE APR – APR is subject to increase after consummation. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes.

2 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student Loan RefinanceFixed rates from 3.999% APR to 7.804% APR (with AutoPay). Variable rates from 2.480% APR to 7.524% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.480% APR assumes current 1 month LIBOR rate of 2.07% plus 0.91% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

3 Important Disclosures for CommonBond.

CommonBond Disclosures

  1. Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate DisclosureVariable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2018, the one-month LIBOR rate is 2.07%. Variable interest rates range from 2.72%-8.17% (2.72%-8.17% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.50%-8.69% (3.50% – 8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled, must be in repayment of their existing student loan(s) and must make the minimum number of payments after leaving school. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
  7. Average savings based on 18,113 actual customers who refinanced their federal and private student loans through our Education Refinance Loan between January 1, 2017 and December 31, 2017. The calculation is derived by averaging the monthly savings of Education Refinance Loan customers whose payments decreased after refinancing, which is calculated by taking the monthly student loan payments prior to refinancing minus the monthly student loan payments after refinancing. The borrower’s savings might vary based on the interest rates, balances and remaining repayment term of the loans they are seeking to refinance. The borrower’s overall repayment amount may be higher than the loans they are refinancing even if their monthly payments are lower.
2.57% – 5.87%Undergrad
& Graduate
Visit Earnest
2.80% – 6.38%1Undergrad
& Graduate
Visit Laurel Road
2.48% – 7.52%2Undergrad
& Graduate
Visit SoFi
2.47% – 7.99%Undergrad
& Graduate
Visit Lendkey
2.57% – 6.65%3Undergrad
& Graduate
Visit CommonBond
2.72% – 8.17%4Undergrad
& Graduate
Visit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.