How to Afford Having a Baby While Paying Your Student Loans

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As of August 2010, when our first child was born, my husband and I owed about $35,000 in student loans.

To make matters more complicated, my husband and I moved to a new state during my pregnancy so he could take a new job. I took a year off from my previous career of teaching (which has now stretched into six years and a new career), plus we bought a house in our new town, even though it took nearly a year to sell our previous residence.

In short, our first few years of parenthood did not look like we were in the best financial shape for welcoming a new baby – particularly considering the fact that costs about $245,000 to raise a child born in 2013 (when we had our second baby) from birth to age 18, according to the USDA. And that nearly-quarter-of-a-million-dollar price tag does not include college costs.

The USDA’s estimates might convince many student loan borrowers that there is no way they can afford a baby while still owing student debt. But it is possible to fulfill your dreams of starting a family before you pay off your student loans.

Here’s how to afford having a baby while you pay your student loans.

Create a post-baby budget ASAP

Before you start trying for a baby (or as soon as you know a little surprise is on his or her way), sit down and calculate your post-baby budget.

Now is the time to estimate your expenses for everything from diapers to childcare to medical care. The First Year Baby Costs Calculator from can give you a good introduction to the various costs to consider and what you can expect in your area of the country.

Once you have a sense of how your monthly budget will change post-baby, commit to living on that budget starting today. This will help you get used to living on a reduced amount while also allowing you to bank the extra money to build a financial cushion for when baby arrives.

Reduce your student loan payment

For many expectant parents, no amount of budgeting and fat-cutting can make their current student loan payments work with new baby costs. That’s when it’s a good idea to start exploring options for reducing student loan payments.

Discretionary forbearance

This option allows you to postpone or reduce monthly loan payments for up to 12 months during a period of financial hardship.

Since having a baby does not qualify for mandatory forbearance (wherein your lender is required to grant you a postponement of payments), you will have to request your forbearance with your lender and continue making your normal monthly payments until you are officially enrolled in forbearance.

Requesting a forbearance can be very helpful to borrowers without access to paid maternity or paternity leave, since it can put your student loan payments on hold during the time that you are not working.

Apply for an income-driven repayment plan

Uncle Sam recognizes that not all federal student loan borrowers are able to swing the standard repayment schedule, which is why borrowers may enroll in income-driven repayment plans.

These plans allow you to reduce your monthly payment based upon how much you earn and the size of your family.

Pay As You Earn (PAYE) is available for anyone who was a new borrower as of October 1, 2007 and who received a direct loan disbursement on or after October 1, 2011.

PAYE allows your monthly payments to be capped at 10 percent of your discretionary income and your payments will never be higher than what they would be through the Standard Repayment Plan.

REPAYE is very similar to PAYE, except that more borrowers are eligible. Additionally, your cap of 10 percent of discretionary income could be higher than your standard payment amount, depending upon your income.

Income-Based Repayment (IBR) caps your monthly payment at 10 to 15 percent of your discretionary income, depending on when you took out your loans.

To qualify for IBR, you generally need to owe more than your annual salary. Also, like PAYE, you must be a new borrower as of October 1, 2007 and have received a disbursement of a Direct Loan on or after October 1, 2011.

Income-Contingent Repayment (ICR) caps student loan payments at the lesser of two options: 20 percent of discretionary income, or what the payment would be on a fixed, 12-year payment plan, adjusted according to income. Like the REPAYE plan, ICR is available for most borrowers.

Switch to a graduated repayment plan

If you anticipate that your income will increase over the years and you just need a reduction in monthly payments for the first few years after your baby is born, consider a graduated repayment plan.

With these plans, your payments start out lower but increase over time – generally every two years. You can expect payments under such a plan to be spread out over the course of 10 years, which makes this a good option for new parents in fields with strong future earning potential.

Most federal loans are eligible for a graduated repayment plan.

Get on an extended repayment plan

Borrowers are allowed to extend their repayment schedule for up to 25 years and make fixed or graduated payments during that extended time. While tacking more time onto your repayment schedule does mean you will end up paying more overall for your student loans, it can make enough of a difference right now to make starting a family much more financially feasible.

Take advantage of tax breaks

You are probably aware that you can deduct student loan interest from your adjusted gross income (AGI) on your annual tax return. But your little bundle of joy also comes with some helpful tax breaks that can help you to better afford his care and feeding.

Dependent exemption

The IRS offers taxpayers an exemption of $4,050 (as of 2016) for personal expenses. That means that you do not have to pay taxes on $4,050 of your annual income – and married couples filing jointly can declare $8,100 in personal exemptions.

Once baby makes three, you can claim an additional dependent exemption for the same amount for your new child, meaning a family of three can exempt up to $12,150. This exemption is not phased out until you reach an adjusted gross income (AGI) of $259,400 for singles, and $311,300 for married couples filing jointly as of 2016.

Child Tax Credit

Unlike the exemption, which reduces the amount of income you need to pay taxes on, the child tax credit reduces your tax bill by $1,000 per qualifying child. Married couples filing jointly with an income below $110,000 and single parents with an income below $75,000 qualify for this credit.

The Child Tax Credit is non-refundable, meaning if your tax liability is lower than the credit, you will not get the difference back from the IRS.

For example, a family with two children with a tax liability of $1,500 would actually owe nothing to the IRS because of their $2,000 child tax credit – but they would also not receive the $500 difference in the form of a refund, either.

However, families in that situation may still receive a refund because of the Additional Child Tax Credit.

Additional Child Tax Credit

While the child tax credit is nonrefundable, the Additional Child Tax Credit is. That means that even if you lose out on a refund through the Child Tax Credit, you may still be eligible for one through the Additional Child Tax Credit. Here’s how:

If your Child Tax Credit is higher than the taxes you owe and your earned income is greater than $3,000 for the year, then you will receive your credit refund in one of two ways:

  • As the amount of unused child tax credit. In the example of a family with two kids and a $1,500 liability, then unused credit would be $500
  • 15 percent of your taxable earned income over $3,000.

You will receive whichever of these two amounts is lower. Form 1040 (Schedule 8812) can help you determine if you are eligible for the Additional Child Tax Credit.

Though this is unreasonably confusing, the good news is that any e-file software will calculate the child tax credit and additional child tax credit computations for you.

You can afford a baby while paying off student loans

Owing money on your student loans is no reason to put your big dreams on hold. It certainly makes sense to work hard to get your financial house in order before you welcome a new baby, but it’s also possible to afford major life changes before you send in that final payment. Just be willing to make savvy financial choices and strategic sacrifices to be ready for the stork’s special delivery.

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. (

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 We also have several resources available to help the borrower make a decision at, 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.