Can You Adopt a Child While Paying Student Loans?September 27, 2021
If you have a lot of outstanding educational debt and you’re dreaming of building a family through adoption, you may be worried about adopting children while you’re still repaying student loans. After all, the cost of adopting kids can be very high, and it can add to your existing financial obligations.
The good news is, adopting children with student loans is financially possible. You just need to have a plan in place to manage your loan debt and the cost of adopting kids.
Understanding the cost of adopting kids
The biggest potential obstacle to adopting children with student loans is coming up with the money to pay for the adoption while still making your loan payments.
According to American Adoptions, the average cost of a private adoption within the United States is between $50,000 and $60,000. This includes:
- Adoption agency fees
- Medical expenses for the birth mother
- Living expenses for the birth mother during the pregnancy
- Legal fees
International adoption, on the other hand, can total around $20,000 to $40,000, according to Family Connection Christian Adoptions.
These fees can be difficult to pay while also covering student loan costs. However, certain adoption loans and grants are available that can help to defray the cost of adopting kids. Parents may also be eligible for an adoption tax credit to cover qualified adoption expenses.
Adopting kids with student loans
Adopting kids with student loans can be complicated for a few reasons.
First, if you have a high student loan balance, it may be more difficult to qualify for an adoption loan due to your debt-to-income ratio. Second, your loan payments could impact your ability to save the money you need to cover the costs of adopting your child.
The good news is, you have numerous options for reducing your monthly student loan payment, which can free up some of your cash and sometimes make it easier to borrow as well. Here are some solutions if you’re interested in adopting children with student loans.
Put your loans into deferment or forbearance
If you have federal student loans, you may be able to pause payments if you can qualify for either deferment or forbearance. Deferment even enables you to avoid accruing interest on Subsidized Direct Loans, as the government pays your interest during the deferment period.
Both deferment and forbearance have certain eligibility requirements to meet, although they differ based on which you choose. Talk with your loan servicer about whether you qualify to pause your payments.
Many private lenders also allow loan forbearance, although interest does accrue while payments are paused. Keep in mind that eligibility rules may be stricter for private loans than federal loans, and deferment may only be available for a short period of time. For information about your specific situation, speak with your private lender.
Change your student loan payment plan
With federal student loans, you also have the option of changing repayment plans, which can help reduce your monthly payment.
For example, you could switch to an extended or graduated repayment plan from the standard plan in order to lower current payments. Or, depending on how much you earn, choose an income-driven repayment plan that caps payments at a percentage of your income.
Changing your payoff plan could both free up cash and help your debt-to-income ratio since your monthly payment will be lower relative to your income.
Consolidate your student loans to extend your repayment timeline
With federal student loans, obtaining a Direct Consolidation loan could allow you to stretch your repayment timeline out even further. This can also help to reduce the amount that you pay each month, which again makes it easier to cover the costs of adopting children with student loans.
Consider student loan refinancing
While you have many options for managing federal student loan costs, private student loans can be a little more complicated. Most private lenders don’t offer the option to change your term or repayment plan, so it’s important to understand the choices available to you.
The good news for private borrowers is that student loan refinancing may help. Refinancing involves choosing a new lender to pay off your original student loan, then repaying the new lender instead. The primary benefits of student loan refinancing include the chance to earn a lower interest rate and change your repayment term.
You can refinance both federal and private student debt, but keep in mind that refinancing federal student loans means giving up federal benefits. Alternatively, you can choose to refinance only your private student loans.
By refinancing your student loans, you may be able to reduce your debt-to-income ratio, as well as free up more cash to help manage the cost of adopting kids.
Regardless of which approach you choose, the important thing to remember is that adopting kids with student loans is possible, so there’s no reason to give up on your dreams of building a family solely because of student debt.