5 key strategies to deal with student debt
Editorial Note: Forbes may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations.Millennials have been having fewer kids than previous generations—or at least are waiting until later ages to have them. There’s not much debate about that. Whatis how big a factor the burden of student debt plays in discouraging folks from starting families.
Let the experts argue. In my financial planning practice I see real people who are struggling to balance student loans and having children. Currently, I’m working with someone who likely has to make a choice between paying off her student loans and starting a family. If she pays off the loans, it’ll be nearly impossible for her to afford having a child. If she has a child, it would introduce expenses that make it extraordinarily difficult to keep repaying the loans.
Admittedly, this client is an extreme example. But millions of Millennials, as they begin their lives and careers, need to consider how to balance paying off their student loans with their other financial goals—be it children, homeownership, or saving for retirement. Here are some points to keep in mind.Income-driven student loan repayment plans are a great way for those just coming out of school to have a manageable monthly payment.
This is fine if you are going for a forgiveness program, but may lead you to having to repay far more in the long run than if you were on a standard repayment plan. For example, I consulted with a married couple who took out a total of about $160,000 of student loans. They started their careers in lower paying jobs and on income-driven repayment plans, paying a few hundred dollars monthly. A decade into their careers, the balance sat at $210,000.
So before you jump straight to the plan that gives you the lowest monthly payment, consider the balance between low payments now and more total debt to repay later—at a time when you might, for example, want to be starting a family.There are dozens of loan forgiveness programs out there. There’s the big one many of you have heard of, Public Service Loan Forgiveness. But there’s also the
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