How to Get Your Student Loans Under Control Before You Have a Baby

how to manage student loans

You want to start a family, but there’s something holding you back: your student loan debt. Like many people, your debt makes you feel financially unprepared for parenthood.

Millennials are having children later than previous generations. One likely reason for this is student debt. About 28 percent of young adults ages 21 to 35 say student debt has forced them to delay major life decisions such as starting a family, according to a survey.

It’s important to be financially prepared to have a baby, which includes responsibly managing student loans. Student loans don’t have to put your plans on hold. Instead, read on to learn how to manage student loans and create room in your budget for a baby.

How to manage student loans and prepare for parenthood

1. Pay extra on your student loans

If you can afford to, work on paying off your student debt entirely. Parents-to-be with higher incomes, lower loan balances, or other low costs of living can afford this strategy. If you have money left over each month after paying bills and necessities, devote that to paying off student loans.

If you don’t already have a monthly surplus, try to create one. Revisit your budget and look for opportunities to economize. Find the items you’re either overpaying on or can skip altogether, and scale back. Then apply those saving to paying off your student loans.

Maybe you can’t pay off all of your student debt but your extra payments would be enough to take out one of your student loans. Target the balance with the highest interest rate first to save you the most money over time. Or, you can try to repay the lowest balance first and easily knock out that monthly payment to free up some cash flow.

Here’s a look at this principal in action: Say you have three more years left on a $12,000 student loan and you pay $355 a month on this debt. But you know you’d like to have a child much sooner than three years — maybe in the next year and a half.

If you can round your monthly payments up to $500 a month (an extra $245), this student debt will be gone in 1.8 years instead of three. You’ll save $312 in interest and free up that $355 a month to help cover baby expenses.

See how these extra payments will affect your repayment period and interest with the student loan payoff calculator below.

Student Loan Prepayment Calculator

  • Monthly Payment

  • Interest Paid

  • Total Amount Paid

  • Time to Repayment

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2. Refinance your student loans

Maybe you can’t get rid of your student debt without waiting five years or more to start a family. If you otherwise feel ready to have a baby, you need to figure out how to manage student loans now.

For many borrowers, especially those with higher interest rates, keeping up with interest charges is the biggest pain point of student debt. It can feel like you’re barely keeping up with interest, let alone getting ahead on your student loan balance.

However, refinancing student loans can be a way to get a better interest rate before paying off your student loans. The best student loan lenders for refinancing offer interest rates as low as 2.49% APR.

Refinancing to a cheaper interest rate will lower your monthly payments right now by decreasing your interest charges. You can also choose a longer repayment period to lower monthly payments even further.

Note that refinancing student loans will have some drawbacks, such as losing out on federal student loan repayment options and protections. You’ll also need a higher income and good credit to qualify for favorable rates.

3. Get on an income-driven repayment plan

If refinancing isn’t the right choice for you, an income-driven repayment (IDR) plan is another option. Instead of figuring out how to manage student loans with high payments, you can reduce your monthly payments according to your income instead.

An IDR plan will set your monthly payments to match your income and expenses, rather than your student loan balance. This can make a huge difference if you have a high student loan balance or a low income relative to your payments. IDR plans even offer forgiveness of remaining balances after 20 to 25 years of payments, depending on the specific plan.

Enrolling in an IDR plan ensures that you can afford both student loan payments and a baby. It will also free up funds for important preparations to have a baby, such as saving for hospital and parental leave costs.

4. Ask for help managing student loans

The prospect of grandkids can be a great motivator for your parents to help you tackle your student loans. Consider asking your parents for help repaying student loans — but first, make sure they can afford to help without setting their own financial goals back. You don’t want it to affect their finances negatively or delay their retirement.

Parents can contribute to your student loan payments in several ways. They can make a lump payments to knock out a student loan or add to your monthly payments.

If paying your loans isn’t an option, parents can still help by cosigning on student loan refinancing or offering an interest-free family loan to repay your student debt. You can even ask for non-financial help to repay student loans, such as free child care once your baby arrives.

Before becoming a parent, repaying student loans might have been the biggest financial commitment you’ve ever made. But when you become a parent, you’ll be responsible for every cost of your child for at least 18 years.

Take parenthood seriously now and prepare yourself, your finances, and your student debt for having a family.

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