How to Crush Student Loan Debt While Raising a Family


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.”

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