A recent survey of millennials by Study.com found 28 percent respondents are delaying “major life decisions” such as marriage and having children because of their student loans.
That’s more than one in four young adults who are putting off their futures indefinitely due to debt. Even more concerning, an entire generation of Americans might not ever exist if the issue of student debt isn’t solved.
Here’s why student loan debt is causing so many millennials to avoid having children, and more importantly, how can they overcome debt to start families of their own.
Reason #1: Stress
David Carlson, personal finance expert and owner of blog Young Adult Money said, “My wife and I are absolutely delaying children due to student loan debt.” He explained that it’s caused stress in their lives and he does not want to have children until the family is “1) debt-free — at least everything other than a mortgage — and 2) in a position to save aggressively for their college education.”
Carlson is not alone. A study by the University of South Carolina and the University of California, Los Angeles showed “those who owe money for student loans experience an overall increased number of mental health symptoms signaling depression…The study also showed that the higher the debt, the more symptoms that followed.”
For people who feel stressed or depressed because of their student loan balances, the only way to alleviate these feelings is to to start making significant progress in their repayment strategies.
Whether that means refinancing student loans to a lower interest rate, taking on extra work or a side gig, or significantly cutting back expenses, most people do have the ability to pay off their loans quickly by taking an active and focused approach with their budgets, spending, and repayment strategies.
Reason #2: Child Care Costs
Rebecca Stapler, attorney and personal finance blogger, explained that child care costs factored greatly into her family planning. She said, “We delayed having our second child because of our student loan debt. My husband and I met in law school, and have matching six-figure law school loans. We waited four years to have our second child so that we could space out our child care costs, which are over $20,000 per year for infant childcare in our area.”
According to data from the Pew Research Center, average child care costs vary depending on where you live in the United States. For example, in my hometown of New Jersey, annual daycare costs can be up to $12,000 a year per child. Since I have two children, this is one of the main reasons why I only have a part-time nanny.
For parents who don’t have schedules that are flexible, the cost of child care factors significantly into family planning decisions.
If this is the reason why you are delaying having children, there are many options. For example, you can hire an au pair, a worker from a foreign country who comes to the U.S. to live in your home and help with childcare and housekeeping responsibilities. Au pairs work for no more than 10 hours a day, five days a week for roughly the same cost as having part-time help.
You can also join a co-op, where parents volunteer their time at daycares or preschools in exchange for lower monthly costs. You can also get creative, by trading babysitting with other moms, or negotiating a flexible work schedule.
I personally waited to have children until I knew I could be self-employed. I saved six months of solid self-employment income before even trying to have a child. When I had my twins, I worked as much as I could while still caring for them during the day. The schedule was brutal, but today I have more balance with a part-time nanny.
If you are committed to having a family one day, know that there are several childcare options at many different pricepoints. You just have to find the one that works best for you.
Reason #3: Lower Income
Kirsten, an aerospace engineer and blogger behind Indebted Mom, explained that when her husband was finished with his own engineering degree and got his first full-time job, he was only making $30,000 a year with over $100,000 in student loans.
“Our monthly payments were close to $1,500. I couldn’t imagine having kids at that point! How in the world would we be able to afford them?!” she said. “We had to wait until our income grew significantly. After our combined income grew by $50,000, it finally felt like we could afford children.”
It costs an average of $245,000 to raise a child born in 2013 through age 18. Because of this, many parents like Kirsten want to wait until they feel financially secure enough to have children. This is definitely something to consider, since being financially stable is an important ingredient in raising a family.
If you want to grow your income before having children, there are many avenues you can take. Start by asking for a raise from your current boss, or consider switching to a higher-paying career, taking on extra work, or even starting a side business in addition to your traditional nine to five.
The extra work and extra income can help you combat some of your student loan debt while freeing up some space in your budget to start a family.
Ultimately, there are many people who delay having kids because of their student loans and many others who decide not to have children at all.
As someone who has children and the burden six-figure student loan debt, I definitely understand all the concerns above. I combated them by raising our income through my business, saving an emergency fund before having a child, paying what we could towards student loans, and personally taking on the majority of childcare in their first year of life.
Although it’s been challenging, we are well on our way to aggressively paying off our loans, and we’re very glad we had children when we did. The decision won’t be right for everyone, but if you’re wavering and really want to start a family, know that it is possible as long as you are willing to work through the issues with some of the solutions above.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 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% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 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.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). 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 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.57% – 6.97%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|