Stress and budgetary issues are among the factors experts cite when discussing why millennials’ student debt could make them hesitant about having children. According to the Federal Reserve, borrowers owe a combined $1.6 trillion in student loan debt.
Here are some ways total debt amounts and monthly payments may frighten millennial borrowers, along with ways to fight back.
3 ways millennials’ student debt could be holding them back
Millennial couples — defined as those aged 24 to 39 in 2020 — need to make it clear with one another whether they want to have children if finances, including student loan debt, aren’t a factor.
Often, one spouse doesn’t want to have children and is looking for an excuse, said Alan Schoenberger, CEO of Melville, N.Y.-based Endeavor Financial Planning. The real reason may be finances, other marital stress or just not wanting to have children at all.
But even if both partners are keen to start a family, the stress could feel like having kids would be too much.
Stress and school debt often go hand in hand: A September 2019 poll by Morning Consult, a global survey company, found that 47% of millennials stress a lot about undergraduate student loans. Only 12% of millennials said they don’t stress at all about student loans.
The thought of repaying tens of thousands in student loan debt is magnified when thinking about how to also afford having a child. The average cost for a regular delivery is $10,808, according to the International Federation of Health Plans. (To get a better estimate for yourself, contact your health insurance company.)
And it’s not just the hospital costs — child care costs can also pose a big dilemma. It costs an average of $213 weekly to send an infant to day care, according to Care.com. Over 52 weeks, that’s more than $11,000.
Budgeting in the shadows of paying back student loan debt while also planning for a child can be tough, both mentally and financially.
Someone fresh out of college might have a large student loan debt, but a similarly large income is less likely for many new grads. And a low to middling pay level could be another reason deterring millennials (and other student loan borrowers) from having kids.
The median income for households headed by millennials is $69,000 when adjusted for family size, according to the Pew Research Center. This is well below the $85,800 that Gen Xers are pulling in, and younger millennials with less experience in the workforce could earn far less than the median figure.
Find a solution to your student debt crisis
From comparing repayment plans to reviewing your spending, here are some expert tips about how millennials can help their situation amid the student debt crisis.
- Compare federal student loan repayment plans
- Cut housing costs if you’re a homebuyer
- Cut housing costs if you’re a renter
- Slash vehicle costs
- Negotiate your bills
- Drop entertainment expenses
- Focus on boosting income
- Review current spending for empty calories
A prime way to make your student loans manageable is to access income-driven repayment (IDR) plans (assuming you have federal loans). With an IDR, the amount of your monthly payment is capped at a percentage of your disposable income.
In fact, if your income is low enough, your monthly bill can be as little as $0. In that case, however, even though you’d be paying nothing to service your debt, the interest would still pile up. Still, it might be a huge relief if you have a typical monthly student loan payment around the average $393.
Even without an IDR, if you can extend your payment plan on your federal loans from 10 to 25 years, you could have extra monthly income while your children are younger.
If you’re a millennial homebuyer — more are preparing to buy homes, according to LendingTree research — refinancing your mortgage may save you hundreds of dollars monthly.
Housing is the largest monthly expense for many — and 30-year fixed-rate mortgages were averaging below 4% as of January 2020.
Renters can cut costs by avoiding rental fatigue on their next lease negotiation or new apartment. Compare prices nearby and make sure you’re getting a good deal.
If you’re considering moving to get cheaper rent because you’re overpaying for your apartment, talk to your landlord about the situation and see if they’ll drop the price. They also may throw in extras, such as a free apartment cleaning, for renewal.
If you’re leasing a new car every three years, or driving a fancy model, consider purchasing a moderately priced vehicle that can last you the next 10 years, according to Natalie Colley, an associate advisor at New York-based Francis Financial.
She estimated this could save $200 to $500 a month.
While certain household costs seem like fixed expenses, many could be negotiated, Colley said. These include:
- Insurance rates could be reduced by comparison shopping.
- Cellphone and cable bills could be negotiated by calling service providers and asking about specials, especially if you’re no longer on contract.
- Electricity costs and food budgets could be reduced if you’re more mindful of your needs.
Money previously spent on after-work and weekend fun will often naturally decrease after having children, Colley said. Add in restaurant coupons and your savings will be even higher.
Colley’s estimated savings on these would be $100 to $500 a month.
Before having a child, you could get ready for extra expenses by taking on a second job or side gig to save up or pay down debt, Schoenberger said.
When you have a child, you might not have much time for additional employment. Instead, you could consider seeking a promotion or a raise from your current employer.
Schoenberg and Colley both believe in using all possible resources to make sure you’re getting paid what you should be or looking for a job that pays you more.
Empty calories, budget-wise, are the expenses you’re not enjoying. For instance, you could be overpaying for car insurance because you didn’t compare rates. It can also be chips that you eat mindlessly during your commute that you don’t enjoy.
Monitor your budget for at least a month, review and eliminate any spending that doesn’t benefit you in some way.
Base kid costs on your — not your friends’ — expectations
Sit down with your partner and discuss spending priorities for your children. Don’t worry about what your friend spends on private school, summer camp or designer baby clothes unless you feel those items are necessities for your child.
Millennials will continue to be a driving force for the U.S economy, so it’s important they are able to handle their student loan debt and expenses if they choose to have children.
Cat Alford contributed to this report.
Interested in refinancing student loans?Here are the top 9 lenders of 2022!
|Lender||Variable APR||Eligible Degrees|
|1.74% – 8.70%1||Undergrad & Graduate|
|1.74% – 7.99%2||Undergrad & Graduate|
|4.44% – 8.09%3||Undergrad & Graduate|
|1.74% – 7.99%4||Undergrad & Graduate|
|1.89% – 5.90%5||Undergrad & Graduate|
|1.74% – 7.99%6||Undergrad & Graduate|
|2.05% – 5.25%7||Undergrad & Graduate|
|1.86% – 6.01%||Undergrad |
|N/A8||Undergrad & Graduate|
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1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 4, 2022.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Student Loan Refinance Interest Rate Disclosure Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Let us know if you have any questions and feel free to reach out directly to our team.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Apr 22, 2021 and may increase after consummation.
4 Important Disclosures for SoFi.
Fixed rates range from 3.49% APR to 7.99% APR with a 0.25% autopay discount. Variable rates from 1.74% APR to 7.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR 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. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
5 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
6 Important Disclosures for Navient.
7 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 5/17/2022 student loan refinancing rates range from 2.05% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.93% Fixed APR with AutoPay.
8 Important Disclosures for PenFed.
Fixed Rate Loan Terms: 5 years/60 monthly payments, 8 years/96 monthly payments, 12 years/144 monthly payments or 15 years/180 monthly payments. Annual Percentage Rate is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed rates range from 3.29% to 5.43% APR. Rates are subject to change without notice. Fixed APR: Fixed rates will not change during the term. This rate is expressed as an APR. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan. These rates are 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.