How to Handle Student Loans When You’re a Stay-At-Home Mom

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Many parents long to be home with their kids rather than working. In fact, a majority of working mothers (54 percent) say they’d prefer the role of stay-at-home mom, according to a Gallup Poll.

Parents with student loan debt often feel like being a stay-at-home mom isn’t an option. However, being a stay-at-home parent is primarily a lifestyle choice, not a financial one. If your student loan payments are the biggest obstacle standing between you and your goal of staying at home with the kids, it’s time to take a second look at your finances.

The winning strategy for managing student loans as a stay-at-home mom is pretty simple: find solutions for student debt, decrease your costs, and look for additional income.

3 ways to manage student loans as a stay-at-home mom

With some smart student loan management, being a stay-at-home mom or dad is more doable than you think.

“Student loans are like any other fixed expense in that you have to repay them or risk your credit score,” said Brett Graff, The Home Economist and author of “Not Buying It: Stop Overspending and Start Raising Happier, Healthier, More Successful Kids.” Like most fixed expenses, you can budget and plan for student loan payments.

Student debt is hard to escape, and the surest way to do so is to pay it off. But just because you have to repay your student loans doesn’t mean you’re stuck with a standard 10-year repayment plan. In fact, there are a few ways you can reduce your monthly student loan payments to create more room in your budget.

1. Refinance student loans

Refinancing student debt helped periodontist and dad Eugene Gamble pay more, even with his wife staying at home with the kids. “I looked into ways of reducing the interest accrued by moving money to lower interest-bearing loans,” he said. He even took advantage of a 0% introductory rate on a credit card.

The easiest and most permanent way to lower interest rates on student debt is through refinancing. Refinancing student loans is most beneficial when you start with higher student loans rates around 6.00% or more — such as with Grad PLUS loans. That’s the interest rate level at which refinancing starts delivering savings.

Refinancing can also help you reset your student loan repayment to a longer period. By stretching repayment of your remaining student loans over a longer period, you lower what you have to pay each month but increase the amount of interest paid over the life of the loan. Try using the calculator below to see how refinancing your student loans could result in a lower monthly payment.

Student Loan Refinancing Calculator






Note that federal student loans have unique protections and payment plans for borrowers that can help manage costs. If you refinance student loans, you will lose these federal student loan benefits. Even so, refinancing student loans can lower your monthly payments and get closer to your goal of stay-at-home parenthood.

2. Switch to an income-driven repayment plan

Another way to reset your student loan payment is through income-driven repayment (IDR) plans on federal student loans. By enrolling in these programs, your monthly student loan payments can be lowered to what’s affordable for your income, cost of living, and family size.

If your household income drops because you choose to step away from work, you can apply for an income-driven repayment plan. You’ll have to certify your income one of two ways:

  • Certify your new household income without your full-time income.
  • Certify just your income as a stay-at-home parent.

Enrolling with your new household income could drop your student loan payments significantly.

Certain IDR plans, like Income-Based Repayment (IBR) and Pay As You Earn (PAYE) allow you to set payments to match your personal, rather than household, income. If you make $0 as a stay-at-home mom, your student loan payments will be matched to this income — at $0. It’s important to note that to do so, you must file your tax return as married filing separately.

You should be aware that if you choose an IDR plan, your student loans will continue to accrue interest. It’s possible that your student balances could accrue more interest than you pay each month, and would grow. However, these plans also offer forgiveness of remaining balances after 20-25 years of payments. You can use this calculator to see how the IBR plan could affect your student debt.

3. Choose another repayment plan

In addition to IDR plans, borrowers with federal student loans can switch to other repayment plans:

  • The Graduated Repayment Plan starts with lower payments at first, then increases them every two years.
  • Extended Repayment Plan can stretch payments out across a period of up to 25 years, to keep costs manageable.
  • Federal loan consolidation will combine your federal student loans into one with a weighted average interest rate. You’ll also have the chance to choose a longer repayment period to lower monthly payments.

Compare these repayment plans with other student loan options and your projected stay-at-home budget. With some work, you can identify the option that will make student loans affordable — even on a single income.

Decrease living expenses to stay at home

If you are a stay-at-home mom or hoping to be one, another key part of the equation are your living costs. The answer to “Can I afford to be a stay-at-home parent?” comes down to whether you can pay for all your living expenses on just your spouse’s income.

“If one income can cover [fixed] expenses, plus your variable costs — entertainment, groceries, savings, retirement, and those expenses you can cut — then you can afford to stay home,” Graff says.

But you shouldn’t just assume your current level of spending will remain the same when you’re a stay-at-home parent. The lifestyle changes of becoming a stay-at-home mom are significant and will result in a lot of adjustments in your budget.

For instance, you can skip childcare costs — a huge part of any working parents’ budgets. You also might eat out less, require a cheaper wardrobe, and have more time for money-saving and do-it-yourself activities like cooking at home.

You can take this further by really cutting into your costs. Terri Huggins, a freelance writer with a nine-month-old who is “aggressively attacking student loan debt,” said she’s doing so by living cheap and budgeting.

“Last month we put an extra $500 towards debt by living modestly and [managing] expenses,” Huggins said. Her efforts include making her own baby food, breastfeeding instead of formula feeding, and using coupons and cash back apps and websites. “Though it can be challenging paying off debt while taking care of our child, we make it work.”

3 ways to increase take-home pay

On the other end of the equation is your income. When you’re switching to being a single-income household, every dollar of take-home pay counts. And if you’re looking for ways to make your budget work, even with student loan payments, start with maximizing your spouse’s paychecks.

1. Adjust tax withholdings

The great news is that by switching to one income, you greatly lower your tax liability. Take the example of a couple with each spouse earning $60,000. An analysis from the podcast Radical Personal Finance shows that if one parent stops working, the tax liability drops from over $22,000 to just $6,346.

This means that your spouse can increase his take-home pay by $390 a month, just by paying fewer taxes thanks to a lower household income. For many families, that $390 a month will more than cover student loan payments.

Just make sure the working spouse adjusts W-2 withholdings, so you’ll see these extra funds in your budget.

2. Downgrade employee-financed work benefits

Another option to increase take-home pay is to downgrade benefits for which the working spouse partially or fully pays. You might be able to switch to a health insurance plan with lower premiums, downshift retirement contributions or stop contributing to a flexible spending account (FSA) for childcare.

You will miss out on some benefits with a downgraded plan, but weigh this against your goal to stay at home and decide what you’re willing to sacrifice.

3. Find additional sources of income

While it helps to increase the working parent’s income, the stay-at-home parent can also chip in here and there to help cover student loan payments. Ideally, these earning opportunities would allow the stay-at-home parent to work from home on a part-time schedule. Babysitting, pet-sitting or managing properties are all ways you can earn a bit extra as a stay-at-home parent.

It’s even possible to continue your full-time work as a part-time employee. After I had my first daughter, I switched to flexible work arrangement where I worked from home part-time. Between nap times and switching off child care with my husband, I could fit in about three to four hours of work each day. And it made a huge difference in our finances.

If such an arrangement isn’t possible, you could consider becoming a freelancer. If you love fitness, for example, you could sell customized health and exercise plans. Whatever you love to do, look for ways to turn that passion into an income source.