Are Student Loans Keeping Millennials from Starting Families?July 19, 2021
Student loans can be financially crippling, and for Millennials, they’ve had a lot of other significant impacts on their lifestyles and major decisions — including when to start a family.
According to a survey conducted by The Harris Poll for CNBC Make It, 12% of student loan borrowers ages 33 to 40 postponed having children because of their student loans, and 10% delayed getting married.
It’s not uncommon for Millennials to feel like they can’t afford to have kids, and some Millennials are not starting families due to student loans. Here are some of the factors at play and steps you can take to save money on your student loan debt.
How Student Loans Are Impacting Millennials’ Family Plans
Debt as a whole can have a significant negative impact on your finances. But student debt is unique in that it’s readily available with low or no credit requirements, it’s necessary for many to obtain a college degree, and it’s incredibly difficult to get rid of in bankruptcy.
While some have been fortunate enough to pay off their debt early or even graduate without student loans, many are still struggling with the financial and mental burden. According to the CNBC survey, 68% of older Millennials — ages 33 to 40 — are still paying off their student loans more than 10 years after graduation.
Millennials Can’t Afford Kids
One of the primary reasons Millennials are not starting families is that they simply can’t afford kids. The average student loan balance is $393, according to the Federal Reserve. According to data from the U.S. Census Bureau and analyzed by SmartAsset, the average Millennial salary is $47,034.
This means that roughly an average of 10% of a Millennial’s gross monthly income goes toward student loan debt.
Add in taxes, retirement savings, rent or a mortgage payment, a car payment and other necessities, and it can be extremely difficult to make room for the costs of having a child.
While health insurance may cover some of the cost of pregnancy and delivery, that’s not always the case. And once a baby is born, there’s clothing, food, health care, and a long list of other necessities you’ll need to pay for.
Student Loans Are Mentally Straining
In a survey performed by Student Loan Planner, 90% of student loan borrowers have experienced significant anxiety due to their debt burden. More than half of high-debt student loan borrowers have experienced depression, and 1 in 15 have considered suicide due to their student loan debt.
Stress, anxiety, depression and other mental difficulties can also make raising children difficult, and they may factor into the trend of Millennials not starting families. Prospective parents may fear creating a poor environment for their future children or may simply not be ready to take on the added responsibilities and stress associated with parenting.
How Millennials Can Save Money on Their Student Loan Debt
As a student loan borrower, there are a few ways you can address your student loan debt and potentially pay it off faster, save money on interest, or even obtain assistance. Here are some potential steps you can take:
- Get on an income-driven repayment plan: Income-driven repayment plans won’t save you money in the long run. But for the short term, they can make your monthly payments more affordable because they’ll be based on your income. What’s more, if you don’t pay the full balance by the time your repayment term ends in 20 or 25 years, the remainder is forgiven.
- See if you qualify for forgiveness or assistance: If you qualify for the Public Service Loan Forgiveness or Teacher Loan Forgiveness program, you may be able to get some or all of your student loan balance forgiven. Also, some government agencies and even private employers offer student loan repayment assistance, which could be worth tens of thousands of dollars if you meet the requirements.
- Make extra payments: If you can make room in your monthly budget, adding more to your monthly payments can help you pay off your debt sooner and save money on interest. Take a look at your budget and see if you can cut back in certain areas. In some cases, you may even consider making some big changes like downsizing your housing or trading in your car for a cheaper one, to create more space in your budget for the long term.
- Refinance your student loans: Student loan refinancing makes it possible to get a lower interest rate and potentially some more flexibility with your monthly payments. With a solid credit history or a cosigner who has one, you could potentially save thousands of dollars with a reduced interest rate. And with repayment terms ranging from 5 to 20 years, ELFI can help you determine the right repayment plan for you.*
The Bottom Line
Millennials have experienced some unique financial challenges, partially due to the worsening student loan debt crisis. In some cases, Millennials are not getting married or starting families because of the financial and mental burden that student loans can have.
If you’re having trouble with your student loan debt, consider taking some of the steps above to gain some relief and potentially even save money and pay off your student loan debt faster.