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Student Loan
Student loans during the family years present dual challenges: managing your own remaining education debt while potentially planning for your children’s future education costs.
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If you’re still repaying student loans from your own education, this debt competes with family financial priorities—saving for children’s college, contributing to retirement, and building home equity. Prioritize completing your own student loan repayment before aggressively funding children’s college savings. You can borrow for education, but not for retirement.
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Considerations for federal student loans:
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Income-driven repayment plans can ease cash flow stress, but extend repayment and increase total interest.
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Public Service Loan Forgiveness (PSLF) becomes increasingly valuable if you’ve been in qualifying employment—you may be approaching the 120-payment threshold.
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Do not refinance federal loans if PSLF eligibility exists, as refinancing will eliminate federal protections.
Considerations for borrowing for children’s education:
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Parent PLUS Loans offer federal protections but limited repayment flexibility and interest rates around 8%. These loans cannot be transferred to children; you remain fully responsible regardless of family circumstances.
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Cosigning private student loans creates joint liability, affecting your debt-to-income ratio for other borrowing needs.
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Before borrowing, exhaust scholarships, grants, and work-study opportunities, and have honest conversations with children about affordable college options. Financial security should not be sacrificed for prestige institutions if more affordable alternatives provide quality education.
Additional Student Loan Resources: