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

 December 8, 2019
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Many adults long to be home with their kids, but parents with student loan debt can often feel like staying at home instead of working isn’t an option.

If your student loan payments are the biggest obstacle between you and your goal, take another look at your finances.

Finding solutions for student debt, decreasing your costs and looking for additional income could be a potential strategy for managing your student loans as a stay-at-home mom or dad.

3 ways to manage student loans as a stay-at-home mom or dad
Decrease living expenses to stay at home
3 ways to bring home more money

3 ways to manage student loans for stay at home moms or dads

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 plan. There are ways to reduce your monthly student loan payments to create more room in your budget.

1. Refinance student loans

A potentially easy way to lower interest rates on your student debt is through refinancing. Refinancing student loans is most beneficial when you start with higher student loan rates, such as those with direct PLUS loans.

Refinancing can also help you reset your student loan repayment for a more extended period. By stretching repayment of your remaining student loans, you lower what you have to pay each month — but you increase the amount of interest paid over the life of the loan. Try using our calculator to see how refinancing 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 federal student loan benefits such as deferment and forbearance. Even so, refinancing student loans can get you 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 one of these, your monthly student loan payments could be lowered based on your income and family size.

If your household income drops because you stopped working, you could apply for an IDR plan, but it’s important to know how you file your taxes. If you file a joint return with your spouse, your IDR application will consider your joint income. If you file separately, your payment would be based on your individual income.

A stay-at-home mom or dad who makes $0 and files their taxes separately would be matched to this income when applying for an IDR plan such as income-based repayment (IBR) or Pay as You Earn (PAYE).

These plans offer forgiveness of your remaining balance after 20 to 25 years of payments. You can use this calculator to see how an IBR plan could affect your student debt.

3. Choose another repayment plan

Besides IDR plans, borrowers with federal student loans have additional options:

  • The graduated repayment plan starts with lower payments that increase, generally every two years. Your term remains 10 years, unless it’s a consolidated loan.
  • The extended repayment plan can stretch payments across a period of up to 25 years to keep costs manageable.
  • A direct consolidation loan will combine your federal student loans into one with a weighted average interest rate. You’ll 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 for moms or dads affordable — even on a single income.

Decrease living expenses to stay at home

If you are a stay-at-home parent or hoping to be one, another key part of managing your student loan debt is your living costs. This comes down to whether you can pay your 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,” said Brett Graff, The Home Economist and author of “Not Buying It: Stop Overspending and Start Raising Happier, Healthier, More Successful Kids.”

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

For instance, you can skip childcare costs — a huge part of 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 such as cooking.

You can take this further by making your own baby food and using coupons and cashback apps and websites.

3 ways to bring home more money

On the other end of the equation is your income. When you become a single-income household, every dollar 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 significantly lower your tax liability.

Take an example of a couple filing jointly with each spouse earning $60,000. On $120,000 in income — based on 2019 tax brackets — you’d owe more than $18,100. Now, consider a couple filing separately where the total income is $60,000. You’d pay about $9,000 in this scenario.

Make sure the working spouse adjusts W-4 withholdings. Maybe they can change their number of allowances to get more in take-home pay each period without it hurting finances at tax time.

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 or stop contributing to a flexible spending account for childcare.

You will miss out on some benefits with a downgraded plan, but weigh this against your goal to stay at home. Then, 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 to help cover student loan payments. These earning opportunities ideally 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 could even be possible to continue your full-time work as a part-time employee. Maybe you can get a flexible work arrangement where you can work from home part time.

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.

With some smart management, student loans for stay at home moms or dads are more doable than you think.

Larissa Runkle contributed to this report.