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If you’re a college grad, you may likely be among the 44 million American adults with hefty student loans to pay off. Collectively, Americans owe more than $1.5 trillion in student debt, with an average of $37,172 owed per graduate.

Add that on top of other monthly expenses and savings goals, and many adults are struggling with making wise financial choices, particularly when it comes to deciding between paying off their own debts and saving for their kid’s future educational expenses.

Fortunately, you may not need to choose. Although it can be difficult, there are steps to help you pay off your student loans while saving for your child’s college expenses.

Starting to Save for Kid’s College Tuition

You may have heard people recommending waiting until you’ve paid off your own student loan debt before you start saving for a child’s college costs. For many, however, this may be impractical. In fact, it also conflicts with the other frequent adage parents hear about saving for their kid’s college tuition: Start early.

When you start saving early, your money has time to grow, which means that you can get more bang for your buck when it comes time to pay that tuition deposit.

So what’s a parent to do? Well, there are a few things to consider when deciding when you want to start diverting some money towards college savings every month.

First, even though you may not be finished paying off your own student loans, you may want to consider it if you’re on track with your other financial goals. For example, do you have an emergency fund and a plan for retirement?

For many, these goals may need to come first before saving for your child’s college. After all, you don’t want to end up in debt during retirement because you prioritized education expenses.

Managing Student Loan Payments While Saving

If you’ve decided to start saving for your kid’s college while still making your own student loan payments, it is important to stay organized. It can be a big mistake to miss student loan payments in favor of sticking money in savings for future expenses, as unpaid student debt can rapidly snowball.

Likewise, your unpaid student loans can continue to rack up interest if a balance remains on the debt, so making smaller payments because you’re saving for a child’s tuition might leave you owing more in interest on your own student loans, which could negate the positive effects of starting to save for kids’ college early.

If saving for their college tuition and expenses while managing your student loan payment seems daunting, student loan refinancing may help you save money on your student loans so that you can put that money towards the future.

Student loan refinancing allows you to trade in all your student loans for a new loan with a potentially better interest rate and more favorable repayment terms. Why trade in old debt for new debt?

Refinancing your loans allows you to use your current circumstances (aka a good job, good credit score, and likely more stable finances) to possibly get a lower interest rate than the current rate on your student loans. This is especially true if you also refinanced to a shorter loan term, thus expediting your repayment timeline.

Additionally, refinancing gives you one loan instead of multiple, such that you only have to make one monthly payment. You can also refinance for an extended loan term, which will give you a potentially lower monthly payment. While this will not save you on interest, it could free up some cash flow and make your student loan payments more manageable.

Saving Money for Your Child’s College

Once you’re ready to start socking away those pennies for your little one’s future art history degree, you have several options for saving. One of the main benefits of starting to save for college early is that you can start saving smaller amounts that could grow over time and offer a good return on interest once college rolls around.

But instead of just sticking $100 a month in a coffee can on top of the fridge, consider the many different savings mechanisms out there that can offer great benefits when it comes to college savings.

For example, 529 savings plans and Coverdell ESA plans are both tax-free when the money in the accounts are used for college. Both plans allow you to invest in stocks or other assets in order to save for your child’s education.

Wondering how much to save for college? The cost of college is on the rise. In fact, the average tuition cost has surpassed inflation by 3% . Over the last decade, college tuition and fees have increased to almost $35,000 per year. It is likely that by the time you’re ready to send off those tuition checks, the price will have climbed even higher.

That being said, the smartest amount to save may simply be what you can afford. If you’re juggling paying off your own student debt while also saving for your children’s future educational expenses, you don’t want to neglect other financial obligations in your life.

Navigating student loan repayment while also saving for the future can be difficult, but smart choices—like considering student loan refinancing either to lower your loan’s interest rate or lower your monthly payment with an extended loan term—could help set you up for success.

Learn more about refinancing your student loans with SoFi.

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The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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Preparing for a new child is an exciting—and daunting—prospect. This can be doubly true when you are planning on growing your family through adoption. Adoptions costs can be remarkably high, but planning ahead can help minimize the stress during this life-changing process.

The Cost to Adopt

According to the most recent data from Adoptive Families , domestic adoptions typically cost $20,000 to $40,000. And the average international adoption costs $35,000.

For those who choose to adopt through the foster care system , the adoption costs may only add up to a few thousand dollars, but families still must plan for all the regular expenses of adding a child to the family, from buying bottles to preparing a new bedroom.

If you are adopting internationally or through a private adoption , the costs can add up quickly, and frequently include expensive international travel and several different types of fees.

Here are some of the common types of costs that arise during the adoption process:

•   Home study
•   Document preparation and authentication
•   Adoption agency application
•   Adoption consultant fees
•   Attorney fees
•   Networking
•   Counseling
•   Birth mother expenses

Each of these expenses can range from a few hundred dollars to several thousand dollars. These large out-of-pocket expenses can seem intimidating to potential adoptive families, causing them to worry that adoption is not financially feasible. There are, however, many ways to finance adoptions, ranging from taking advantage of grants and governmental programs to taking out a personal loan.

Using Grants to Pay for Adoption Costs

Because adoption can be so expensive, many nonprofit organizations offer grants to adoptive families. These grants can range from a few hundred dollars to the full cost of adoption.

Sometimes grants are offered to particular types of families, but most grants’ eligibility requirements are fairly straightforward and are applicable to most families currently in the adoption process.

A downside of adoption grants is that they are not guaranteed and they usually require extra application paperwork and possibly an interview. In general, however, adoption grants are one good option to consider when planning for adoption.

Using Employee Benefits and Tax Write-Offs to Offset Adoption Costs

One often-overlooked potential source of financial assistance for adoptions is your employer. Employer adoption benefits are a growing trend in large companies where there is a focus on employee retention and work-life balance. Employee benefits can range from things like discounted referrals to adoption agencies to outright cash grants.

Some employers will reimburse a certain percentage of overall adoption costs, while others may choose to directly pay adoption agencies for certain services. Each employer is different, but it may be worth contacting your company’s HR department and asking about any potential adoption benefits your company provides.

Another way to potentially offset adoption costs comes from a generous tax credit. The Adoption Tax Credit allows eligible adopting families to potentially receive a tax credit for qualifying expenses paid in the adoption process.

The credit, which was $13,840 in 2018, can help offset adoption fees like attorney costs, travel expenses, and agency dues. Talk to a certified tax professional to learn more. While adoption tax credits may help ease the financial burden, they do not help much with the upfront costs of adopting.

Using a Personal Loan to Pay for Adoption Costs

If you find that grants or other forms of financial assistance aren’t able to meet your adoption needs, you may consider taking out a adoption loan to help cover the upfront costs. Personal loans, which are often overlooked when it comes to planning for adoption, may offer a better interest rate and more favorable payoff terms than credit cards do.

A personal adoption loan is typically an unsecured installment loan. Unlike with a credit card, you can choose to borrow a set amount with a fixed interest rate and term, allowing you to pay it back in equal monthly installments over a set period of time. This means that you may be able to borrow enough to cover the full cost of the adoption upfront and then pay it off over a few years while avoiding high-interest credit cards.

Another potential benefit of using a personal loan to cover adoption costs is the short application process. The process is generally fairly straightforward and some lenders can disburse loan funds within days. This means that you can focus on what really matters: growing your family.

Starting the adoption process and looking for more money to help grow your family? SoFi’s personal loans offer no fee options and low rates to qualified applicants.

Learn more about whether a SoFi adoption loan could be right for you.

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The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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You’ve (more or less) survived having baby #1, which is already an accomplishment. Way to go mom or dad; what an incredible journey it is to be a parent and to raise a child.

Now, you’re toying with the idea of baby #2. But, you’re curious about how much it will cost you. And to make matters more confusing, you’ve got student loans that you’re paying off.

One study showed that 26% of people put off having children because of their student loan debt. This doesn’t have to be you. Having a second baby with student loans can be done, but it requires some planning.

To help you with that planning, we’re going to break it down. First, we’ll cover what to expect financially with a second child. Will it be as expensive as baby #1? What expenses can you prepare for?

Second, we’ll discuss tips on how to prepare for having a second baby, and give specific tips for parents who are having a baby with student loan debt. This will include tips on whether to pay them off, put them on hold, or to keep doing what you’re doing—for all of you parents who are thinking, “want a baby, but in debt!”

What You Can Expect Financially

The good thing about having a second child is that you’ve been through this before—you know what you’re doing. Just think of all that you’ve learned since you had your first baby.

That said, it can be hard to mentally prepare for adding a second baby into the mix. There will undoubtedly be moments where you will have to take it one day at a time, and you should give yourself that freedom and compassion to make mistakes and learn how to keep a kid alive all over again.

Still, there are plenty of ways to help prepare for baby #2 to ensure that the experience is as “under control” as can be. First, let’s talk a bit about what you might expect, financially, when you’re expecting a second.

Hand-me-downs Are Great

It is widely believed that a second baby is less expensive than the first because the second child can wear hand-me-down clothes, use baby #1’s cribs and changing table, and play with hand-me-down toys. And for the most part, this can be true, if parents are able to resist the urge to buy adorable new clothes and toys (although you’re probably going to need another car seat).

Hand-me-downs aren’t limited to clothes and toys, of course. There are other items that can be reused: Carriers, high chairs, bottles (although you’ll want to replace the teat), cribs, strollers, breast pumps, baby baths, baby monitors, children’s toilets, cloth nappies, bouncers, stationary activity centers, nursing pillows, changing pads, and so on. You can save a lot of scratch if you don’t need to buy these again.

(Tip for parents who haven’t had baby #1 yet: Avoid buying obviously gendered clothes. You may find gender-neutral clothes easier to re-use for baby #2.)

Hand-me-downs Have Limits

While it’s a great idea to reuse certain items, this won’t be possible with every item you’ll want or need for baby #2. For example, you may want to purchase new pacifiers, bottle nipples, and even car seats.

Car seats have an expiration date—check the bottom of the seat for a sticker that should list the manufacturer, model number, and manufacture date. It is generally accepted that the expiration date is six years after the manufacture date, but don’t use it if it’s been in a car accident previously—even a minor one.

Similarly, any crib, chair, or bouncer that has sustained significant wear and tear should be replaced; it’s better to be safe than sorry with any piece of baby equipment that could lead to injury if it in some way breaks or fails. This is especially true for any piece of equipment that “holds” a baby in some way.

Also, it can be hard to resist buying special items for each baby. Parents may be unlikely to use only hand-me-down clothing, toys, furniture, and other baby equipment, so be realistic and know that you’ll probably want to buy some stuff new. This goes for enrichment items, too. There could be classes and opportunities for your second child that may be independent (and potentially very different) than for your first child.

You Still Have to Buy Daily Use Items

You can’t reuse disposable diapers, wipe cloths, baby cream, formula, medicine, and other daily use items obviously. And as anyone who has purchased diapers before knows, these items can really add up (it could cost $550 dollars in the first year! ).

Childcare May or May Not Double in Cost

Depending on your specific child care situation, your childcare may or may not double in cost. Be sure to ask your childcare provider if they provide a sibling discount. If they don’t, you may want to look around for providers that do. It may not be a lot, but any discount will help when budgeting for baby #2.

With two children, parents may even want to rethink their current childcare set-up altogether. It may be more economical to consider an at-home nanny or an au pair, or even working with another family to establish a shared childcare situation.

Ideally, you wouldn’t have to double your childcare costs, but figuring out an alternate situation just may not be feasible for some people. It’s good to have some idea of what childcare will look like as you’re planning for your second child, as childcare is a major expense for many young families.

You May Need More Space

Having a second child can be economical in some ways, and less economical in others. For example, will you need more space to accommodate another body? Will you need to move to a larger home or buy a larger car? As families expand, it’s natural for a family’s space to expand as well.

Buying or renting a house with an additional room could be a significant added cost down the line. You might not need to move right away—babies are small—but think about what you might do once your baby grows into a child and later, into a teenager.

So, what’s the verdict? Is having a second kid significantly less expensive than the first? As you can tell, it all kind of depends. Families planning to have a second child will probably want to weigh the items above to see whether the cost is going to feel similar to baby #1, or whether it could be more or less expensive.

Planning Financially For Baby #2

Project Expenses

Before having a second baby, you might wish to sit down and project the expenses involved, from medical costs to childcare to diapers to an allowance for the unexpected. If you can, consider longer term expenses like extracurricular programs and college.

Spending projections not only help you to see whether you can afford a child at your current level of income and spending, but they can guide you in knowing where you can splurge and where you might need to cut back. Spending on children can quite literally be limitless, so think of this as an exercise in prioritization.

Prepare an Emergency Fund

Kids are small, adorable… walking liabilities. Things get broken and kids (and parents) can and do get sick. Also, “regular” life stuff still happens: The economy could turn, parents can get laid off from jobs, grandparents can get sick, and accidents could happen. With little ones in tow, it’s even more important to be prepared in the event of an emergency.

Make a Debt Plan

If you have multiple sources of debt, it’s a good idea to sit down and map out a plan as soon as possible. The first step is to list all sources of debt, including monthly payments and interest rates.

Knowing that your monthly expenses are about to increase, are there any sources of debt—and therefore, monthly payments—that you can eliminate altogether? For example, do you have any credit card balances that you can work hard to wipe out, or significantly lessen, in a few months? High-interest credit card debt is a money suck; doing what you can to reduce interest expenses can help free up money for other stuff.

Consider Options for Student Loans

For some parents, paying off every source of debt, such as their student loans, won’t be possible prior to having children. This is especially the case for families that are attempting to balance making debt payments with saving up an emergency fund. Each parent will have to decide just how much to prioritize both debt payoff and saving prior to and while raising a child.

When you’re pregnant, student loans can feel overwhelming. First, know that you’re not alone and that plenty of parents successfully manage student loan payments while raising a child. If you’ll maintain a student loan balance after your second baby comes into the world, it may be worth exploring options to make those student loans cheaper.

One way to do this is through student loan refinancing. When a borrower refinances their student loans, they’re paying off their old loans—either federal, private, or both—with a new loan. Ideally, this new loan is issued at a lower interest rate or with more favorable terms. But remember, refinancing means you’ll forfeit federal loan benefits such as income-based repayment plans, deferment, and forbearance.

With a new loan, for example, a borrower can do one of a few things: First, they can keep the loan’s term (length) the same, and possibly lower their monthly interest payment thanks to an improved credit score and/or financial situation. This tactic could help free up some cash to spend on other things. Second, a borrower could use this new leeway to speed up their loan term, and pay their loans off faster. They would likely save the most on interest with this strategy, but monthly payments would likely be higher.

Third, a borrower could potentially refinance to a lower rate and lengthen the loan’s term, which could lower the monthly payment significantly. This is an option that borrowers would be wise to consider only if they absolutely must, because you might end up paying even more in interest over the long run, even with a lower rate. (You can read more about all this here .)

When preparing financially for baby #2, there’s lots of planning to consider. But it will all be worth it to bring another bundle of joy into the world.

Check out SoFi student loan refinancing, with competitive rates and no hidden fees for refinancing your loans.

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The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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Perhaps you’ve found your dream home, or maybe you’re still in the exciting stages of looking for the house you want. In either case, you’re likely thinking about getting a mortgage loan—and you may be wondering if the amount of debt you currently have will become a stumbling block to qualifying for a mortgage.

To qualify for a mortgage, a lender needs to be confident that you can responsibly manage the amount of debt that you’re currently carrying along with a mortgage payment. The formula used to determine that is called a debt-to-income (DTI) ratio.

More specifically, a DTI ratio is the percentage of your qualifying monthly income, before taxes, that is needed to cover ongoing debts. This could include student loan payments, a car payment, credit card payments, and so forth. If the DTI ratio is too high, then a lender may see you as a higher risk.

This post will describe DTI in more detail, including how to calculate yours, what lenders typically like to see, and what might be too much debt to buy a house. We’ll also share strategies to manage your debt and lower your DTI ratio to help you qualify for the house of your dreams.

Understanding How Your DTI Ratio Can Affect Your Mortgage Options

The DTI formula is pretty simple. First, make a list of all your debts with recurring payments. Then, if you’re a W2 earner, take your pre-tax monthly income and divide your monthly expenses by this amount. That percentage is your DTI ratio .

Note that, with a mortgage, to calculate your DTI ratio, you’ll need to have a reasonable estimate of monthly property taxes on the home, insurance (homeowners, for sure, and PMI and flood insurance, if applicable), and HOA dues, if applicable. Even if you wouldn’t necessarily pay those bills on a monthly basis, you’ll need the bill broken down into a monthly amount for DTI calculation purposes. (And remember these are just examples. Your actual DTI, as calculated by a lending professional, may differ.)

If your debt-to-income ratio is too high, it can impact the type of mortgage you’ll qualify for. Each mortgage lender will have their own preferred DTI ratio, of course, and lenders can and do make exceptions based on your unique financial situation. Here’s an explainer on desirable debt-to-income ratios from the Consumer Financial Protection Bureau.

Preparing for When You Need a Mortgage

If you know you’ll want to buy a house within, say, the next year or two, it can be beneficial for you to understand how much home you can afford. This will give you time to manage your finances to make getting a mortgage approval easier. Perhaps you can’t pay off all your debt in that time frame, but there are strategic moves to make to position yourself better when mortgage time is upon you. In addition, consider reviewing our home buyers guide to get a better understanding of everything you need to prepare for your mortgage.

First, be careful. There are plenty of debt-related myths, but let’s address two debt-related realities:

1. Having a lot of debt in relation to your income and assets can work against you when applying for a mortgage.
2. If you are consistently late on debt payments, lenders may question your ability to pay your mortgage on time.

Here are a few tips that can help with some of the most common debt challenges:

Student Loan Debt

If you’re looking to take control of your student loan debt, consider refinancing your student loans into one new student loan with a potentially lower interest rate.

This can make paying back your loans easier, because there is just one monthly payment to make. Plus, with a (hopefully) lower interest rate, you can pay back less interest, overall. And, if you’re concerned about your monthly DTI ratio being too high when you go to apply for a mortgage, you may be able to refinance your student loan to a longer term for lower monthly payments, to reduce your current monthly DTI ratio. (Keep in mind, though, that extending your loan term may mean paying more interest over the life of your loan.)

When you refinance at SoFi, you can combine federal loans with private ones, something not many lenders permit. Request a quote online to see what you can save. Note that SoFi does not have any application fees or prepayment penalties.

Credit Card Debt

When you have a significant amount of credit card debt, the monthly payments can negatively impact your DTI ratio.

If you’re concerned about managing credit card debt payments while paying a mortgage, you could even consider focusing your efforts on getting out of credit card debt before you start the homebuying process.

To manage your credit card debt, and ultimately eliminate it, here are a few debt payoff methods to consider

•  The snowball method. List your credit cards from the one with the lowest balance to the one with the highest. Then, focus on paying off the one with the smallest balance first, while still making minimum payments on the rest. When that first card is paid off, focus on the next one on your list and so forth.

•  Tackling high-interest debt first. Using this method, you list your credit cards from the one with the most interest to the one with the least. Then, focus on paying off the credit card with the highest interest while making minimum payments on the rest. Then tackle the next one, and then the next one.

•  Consolidating credit card debt using a personal loan before you apply for a mortgage loan. When you do this, you’ll have just one loan, and personal loans typically have lower interest rates than credit cards (if you qualify). Ideally, keep credit cards open while only using them to the degree that you can pay off in full each billing cycle. And as with all debt payments, make all personal loan payments on time.

By reducing and managing your credit card debt, you can better position yourself for a mortgage loan on the house of your dreams.

Consolidating Your Credit Card Debt with a Personal Loan

Ready to consolidate credit card debt into a personal loan? SoFi makes it fast and easy, and it only takes minutes to apply. Plus, our personal loans have the following perks:

•  Low rates

•  No fees

•  Access to live customer support seven days a week

•  Community benefits; ask about how, if you lose your job, we can temporarily pause your personal loan payments and help you to find a new job

We look forward to helping you achieve your financial goals and dreams. Learn how a personal loan from SoFi can help.

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The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Mortgages are not available in all states. Products and terms may vary from those advertised on this site. See SoFi.com/eligibility-criteria#eligibility-mortgage for details.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the
FTC’s website on credit.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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These days, planning for parenthood can seem even more daunting thanks to student loan debt. Older millennials ages 25 to 34 owe an average debt of $42,000, including credit card and student loan debt, according to Northwestern Mutual’s 2018 Planning & Progress Study.

So when looking to start a family, it’s important to understand how to prioritize your debts and all of the new budget needs you’ll encounter. Raising a baby while making student loan payments is certainly possible, but it just means taking those nine months (or more, if you are thinking ahead) to sort out your finances first.

Student loans and pregnancy go almost hand-in-hand these days, since American women carry two-thirds of all student debt , according to the American Association of University Women. The last thing anyone wants to be thinking about when pregnant, or holding a new baby, is missing a student loan payment, so it helps to plan ahead to start getting your debt under control. Paying off student loans while saving for children is definitely doable.

Whether you are considering refinancing your student loans, lowering your monthly payments by switching to an income-based repayment plan, or are just looking to save more money before the arrival of your new baby, there are plenty of ways to stay on top of your student loan payments while saving for new kid costs.

Preparing Financially for Your First Child

For most families, housing-related costs such as rent, insurance, or a mortgage are their largest expenses. So, if bringing a new baby into your home means saving up for a big move, or even just expanding into a two-bedroom apartment, evaluating if you need more space for your growing family can certainly put a strain on the budget. Childcare itself is the second-largest expense after housing for most families.

Plus, perhaps you even want to start saving now for your child’s future education, so that hopefully they are less burdened by student debt. All of these expenses, in addition to the general costs of raising a child, can really add up and make it feel like paying your monthly student loan payment is not a priority.

However, there are a number of solutions to explore to see if you can reduce your monthly student loan payments and put those savings toward a new baby.

Exploring Income-Based Repayment

If one person in your partnership is becoming a stay-at-home parent, or even taking an extended parental leave from work, consider applying, or reapplying, for an income-based repayment plan, even if you’re already on one for your student loans.

Since your loan payments were originally calculated based on your income while employed, if you inform your loan servicer about your change in circumstance, you might be granted a different, lower payment plan.

These plans can make your monthly payment more affordable, based on your income and family size. Most federal student loans are eligible for at least one income-driven plan .

Income-Based Repayment

Payments are generally 10% or 15% of your discretionary income , depending on when you first received your student loans. Any outstanding balance is forgiven after 20 or 25 years, but you may have to pay income tax on that amount . You generally must have a high debt relative to your income to qualify for this repayment plan.

Income-Contingent

Payments will be either 20% of your discretionary income, or the amount you would pay on a fixed 12-year repayment plan adjusted to your income, whichever is less. Most borrowers can qualify for this plan, including parents, who can access this option by consolidating their Parent PLUS loans into a Direct Consolidation
Loan . Outstanding balances are forgiven after 25 years.

Revised Pay As You Earn (REPAYE)

Payments are 10% of discretionary income , and outstanding balances will be forgiven after 20 years for undergraduate loans.

Pay As You Earn (PAYE)

For this repayment plan, you are required to make payments of 10% of your discretionary income. To qualify, each of those payments must be less than what you’d pay if you went with the 10-year Standard Repayment Plan. The repayment period for PAYE is capped at 20 years. You must be a new borrower on or after Oct. 1, 2007 to qualify .

The important thing to remember about all of these plans is that you must reapply every year, even if your circumstances don’t change. Once you switch over to an income-based repayment plan, you can start saving the difference in amount from your earlier payments. This extra savings could go toward expenses for your new baby.

Student Loan Consolidation and Forbearance

Another option to consider when having a baby while paying off student loan debt is consolidation. Student loan consolidation can lower your monthly payment; however, it does so by lengthening your repayment period, meaning you will end up paying more overall due to the additional interest payments.

A Direct Consolidation Loan can be a smart way to stay on top of student loan payments, and also set yourself up to qualify for eventual loan forgiveness and/or income-based repayment plans.

If you find yourself in a situation where you are truly unable to make your student loan payments due to the costs of a new baby, you can also consider student loan forbearance.

Forbearance temporarily allows you to stop making your federal student loan payments, or at least temporarily reduce the amount you have to pay. In order to request a general forbearance and get approved, you must meet certain requirements .

This usually means you are unable to make monthly loan payments because of financial difficulties, medical expenses (which might include high hospital bills from pregnancy), or change in employment (especially key if one parent is going to stay at home with the baby).

Ways To Save Money

If you are already on an income-based repayment plan and have considered other options to reduce your student loan debt, and are finding it is still not enough to comfortably save for a new baby, consider some other savings tricks to help you manage your money better.

In order to make sure some money ends up in your savings account every month, you can set up a portion of your paycheck to deposit directly into your savings account, instead of just a checking account.

Most banks also have the option to set up recurring transfers yourself between your own accounts. This way, your desired amount will get transferred into savings without you having to think about it.

Keep in mind there are also tax benefits to having a baby , which can earn you some extra cash back to help you reduce your overall amount of student debt.

Refinancing Your Student Loans During Pregnancy

Refinancing your student loans is another way to make your loans more manageable. Refinancing student loans through a private lender such as SoFi can give future parents the opportunity to consolidate multiple student loans into one loan with a single monthly payment.

Refinancing can provide great value as you can choose your repayment terms and potentially end up with a lower payment to free up money. (Just remember that doing this means extending your loan term, which would up the total interest you’ll pay over the life of the loan.)

Take a look at our student loan refinance calculator to see how your loan could change when you refinance. Those savings can then be put toward staying financially secure while having a baby.

Learn more about refinancing with SoFi and see what your new loan could look like in just two minutes.

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The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice about bankruptcy.
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