Refinancing with Earnest
Refinancing rates from 2.57% APR. Checking your rates won’t affect your credit score.Check out Earnest
Single parents have to make ends meet with just one person’s income, time, support system, and resources. Every fixed cost, from rent to student loan payments, can strain the budget.
For single parents struggling with a parent student loan, it can feel like there’s no way to get ahead. However, single parents can solve the challenge of student debt with the capability, creativity, and grit that they rely on each day.
Here are some ways single parents can tackle student loans – and create more breathing room in their budgets each month.
Single parent, student loans: 5 ways to get ahead
1. Refinance student loans
As a single parent, you’re probably used to economizing and keeping expenses low. But have you considered cutting costs on your student loans? Refinancing to lower student loan rates can be one way to do that.
Rebecca Stevens, a single mom and product owner for Weave Communications, refinanced her student loans more than 10 years ago. She consolidated $10,000 in student loans when rates were at a historic low. Her new 1.50% interest rate helped keep her student loans affordable – even after she divorced and became a single mom.
Today’s student loan rates a bit higher, typically around 5.00 to 6.00%. But single parents whose current student loan rates are higher than that can still save by refinancing. With a lower student loan rate, this debt will cost less.
Refinancing student loans also gives you the opportunity to choose new loan terms. For single parents, refinancing is a chance to choose a student loan repayment schedule that matches their goals.
“When I consolidated my loans, I took out the longest term possible so that my payments would always be low and manageable,” Stevens said. She now pays just $72 a month.
Carefully compare your options before you choose to refinance. Doing so will switch federal student loans to private student loans, which have fewer borrower protections and repayment options. And you’ll need good credit and income to qualify.
2. Income-driven repayment plan
Then there is the option to enroll in an income-driven repayment plan (IDR). Unlike refinancing, an IDR plan preserves your loans’ federal status – while still lowering payments.
An IDR matches your monthly student loan payments to your income and cost of living. Income-driven repayment plans are a smart choice for single moms and dads, who often earn less than married counterparts.
Single mothers, in particular, are more likely to face unemployment, reports Forbes. And single moms’ incomes are, on average, less than a third of the combined income for married couples with one or more child at home.
Sound like you? When low income is the problem, an income-driven repayment plan can reduce payments to match and free up monthly cash flow. It can even set payments as low a $0 for borrowers who are unemployed.
3. Defer or forbear student loans
For single parents who need a break from student loan payments altogether, deferment and forbearance are two options. These will “pause” student loan payments. Thus, the single parent has a period to get back on their feet financially before having to resume student debt repayment.
To get a deferment or forbearance, you’ll need to meet one of the following requirements (among others):
- Defer student loans while enrolled in college at least half-time, for the duration plus six months after enrollment ends.
- Defer student loans for up to three years due to unemployment or inability to find full-time employment.
- Defer student loans for up to three years due to financial hardship.
- Forbear student loans for up to 12 months at a time, at the discretion of your student loan servicer. Common reasons for forbearance include financial difficulties, medical or emergency expenses, or employment change.
Many single parents struggling with student debt can meet one of the above requirements for deferment or forbearance.
However, student debt will continue to accrue interest even if you don’t have to make payments. So deferring or forbearing on student loans will increase your student loan balance and increase your total costs.
4. Increase your income
Single parents should look for ways to maximize their take home pay. Of course, that is easier said than done, especially when you’re balancing work with family life. But there are a few things you can start thinking about:
- Look at where your paychecks are going. This can be a way to immediate increase your take-home pay. Adjust W-4 withholdings for bigger paychecks – as a single earner with a dependent child, you face fewer taxes. Consider scaling back employee-paid benefits.
- Focus on increasing your salary. Work toward earning a raise or switching jobs. Stevens was the primary breadwinner in her household for more than half of her 11-year marriage. Even so, she made getting a well-paying job a central focus as she went through her divorce. “I was not willing to leave the marriage until I found a job that met my financial criteria as well as having a good work-life balance,” she said.
- Communicate with your ex. Child support can make a big difference for a single parent’s budget. Keep an open discussion with your ex about how to cover your child’s costs. Hold them responsible for their end of the deal. If they stop paying or gets behind on child support, try to stay on good personal terms – while diligently following up on this big financial issue.
- Consider returning to college. Single parents are less likely to have a college degree than married parents, according to the National Center for Education Statistics. However, a college education can bring a huge boost in earning potential.
Going back to college, even as a parent, could be a smart investment in your future – and your child’s. Plus, enrolling in college is a qualifying reason to defer student loans.
5. Use public assistance
Spend some time researching benefits and support that’s available. This support can make all the difference to your financial situation. Take a look at programs in your area that can give you more resources to cover living costs:
- Women, Infants and Children (WIC), Supplemental Nutrition Assistance Program (SNAP), and local food banks can help cover grocery costs.
- Medicaid, Children’s Health Insurance Program (CHIP) and Affordable Care Act subsidies can make health insurance affordable (or free).
- Many states have child care assistance programs to help low-income parents cover preschool, daycare, and after-school care.
These programs can help ease money anxiety and improve your family’s quality of life.
Keep the positives in mind
Bottom line – single parenthood is demanding. Remind yourself that you’re up to the challenge. And remember that your kids are watching and learning from how you’re handling your student loans and finances.
For Stevens, her son is a huge source of motivation to do more with her money. “I really want to show my son how to be responsible with money,” she said. “I also want to teach him about taking on debt (being smart about it) and how to be responsible in paying it off.”
Student debt is a big burden, but you can manage it – and even get past it and pay it off. And in the process, you’ll show your kids what self-reliance and responsibility look like in action.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Rates (APR)||Eligible Degrees|
|Get real rates from up to 4 Lenders at once
Check out the testimonials and our in-depth reviews!
|2.57% – 6.32%||Undergrad & Graduate||Visit Earnest|
|2.80% – 7.02%||Undergrad & Graduate||Visit Laurel Road|
|2.51% – 7.80%||Undergrad & Graduate||Visit SoFi|
|2.76% – 8.54%||Undergrad & Graduate||Visit Lendkey|
|2.57% – 6.65%||Undergrad & Graduate||Visit CommonBond|
|2.75% – 8.69%||Undergrad & Graduate||Visit Citizens Bank|