Student loans are a reality of life for millions of people, thanks to to the high price of tuition, fees, room, board, books and supplies at most colleges and universities in America.
But when a student has to borrow to earn a degree, who’s left footing the bill?
Oftentimes, it’s us – the parents – who pay those college loans.
Under some circumstances, that’s a perfectly good and rational course of action.
In other instances, however, it’s best to avoid repaying your adult child’s student debt – especially when doing so veers into the irrational or fiscally irresponsible territory.
If you’re paying your adult child’s student loans, or contemplating it, here are 10 scenarios to consider saying YES, NO or MAYBE to repaying that college debt.
Before you think about paying for your child’s college expenses — or continue doing so — recognize that parents are generally NOT legally required to pay for higher education. State law holds that the obligation to support a child ends when your son or daughter reaches the age of majority, which is 18, 19, or 21 years old, and varies by state.
But it’s another story if you’re divorced and have a divorce decree (like I did with my ex) saying you’re responsible for paying college costs. In such cases, you can be legally required to pay college expenses until your offspring reaches the age of 20, 21 or 23 years old. Again, it depends on your state.
Having said all of this, many parents – myself included – feel a moral obligation to help their children who pursue college to tackle those college expenses. Thus, some parents will pay out of pocket, take on loans, co-sign their kids’ loans or repay student loans when they come due.
If your child is in the repayment phase, or about to enter student loan repayment, the three scenarios below are times when it’s fine, or even advisable, to pay off a child’s college debt.
- You gave your word
In my household we have a saying we’ve told our kids forever. In fact, we do a handshake along with this expression as we say it, in order to cement the sentiment and feeling behind it. The expression goes like this: “A deal is a deal. A promise is a promise, and I will keep mine.”
The point is: if you give your word, you should live up to your end of the bargain.
Therefore, if you already had an agreement with your child, and told him or her that you would pay their student loans, then you should do just that – with one BIG exception.
The exception is: circumstances have dramatically changed making loan repayment impossible.
Let’s say you’ve lost your job, gotten divorced, been sick with health challenges, or now you have a greatly reduced income for some reason …. Well, all of these are major circumstances that understandably affect your finances.
And in such situations, it’s not at all unreasonable – even if you previously committed to repaying a child’s student loans – to have a candid conversation with your son or daughter about why your past commitment is currently no longer doable. (See more tips below for parents who have to say “No” to covering student loan bills).
- Your child is truly struggling and you’re not
Another scenario where you might reasonably take on paying your child’s student loans is when they are really struggling financially, yet you’re quite comfortable economically.
Have you seen the cost of rent these days? For a lot of young adults fresh out of college, and even for people well into their 30s and beyond, just keeping up with housing, utilities, transportation costs and food is a major challenge. Throw in hefty student loan bills and it’s just too much for them to handle.
So as long as you know for sure that your child is not being irresponsible or foolish with their money, but rather they simply don’t earn enough to make ends meet and cover all of their bills, then there’s no harm in providing temporary assistance to help them navigate a tough period.
Just remember that there’s a two-part litmus test here. Part one is that your adult child should be working and paying their own bills for the most part. If they’re not working full-time, they should be aggressively pursuing employment, taking on freelance work or side hustles, or doing something to show they are actively trying to generate income.
And part two is that you should be able to easily pay the student loans without it affecting your lifestyle or finances in any meaningful way.
- It fits your values
It can also be a positive experience all around if you pay your child’s student loans because that’s in alignment with your personal or family values and it reflects your core beliefs.
For instance, 88% of parents believe that college is an investment in their child’s future and that earning a degree will create opportunities that the student would not have had otherwise, according to a 2022 study from Sallie Mae entitled How America Pays for College.
But just because you believe in helping your child and even giving them a leg up, that doesn’t necessarily mean you have to pay their student loans. Some parents choose NOT to pay for college at all, or for grad school, or they agree to only pay for certain educational costs.
Whatever the case, my point is: if you’re paying for those loans because it’s in concert with your own values and what YOU believe, then that’s perfectly fine.
In cases where you’ve articulated your beliefs about the value of higher education to your child or children, even better. Now, you’re presumably paying off the loans as a way to demonstrate those values and beliefs. Plus, you’re modeling behavior to your child that reinforces what you’ve told them verbally.
For those with the wherewithal to knock out a child’s student loans altogether, that’s fine too. But be aware of gift taxes, since under federal law in 2022, you may trigger a gift tax if you give money directly to your child OR pay off a lump sum of their student loans in excess of $16,000.
For many parents, the heart often trumps the mind when it comes to our kids. We simply act out of love and, consequently, we’ll sacrifice almost anything for our children.
But is that really the best thing to do – for them, or for us?
In many cases, unfortunately, it’s not.
So here are four scenarios when you should wrap your head around saying “No” to paying off your adult child’s student loans.
- They were hard-headed
According to the Sallie Mae study, 81% of families said they eliminated a school from consideration based on cost at some point in the college application process.
But what if you directly told your child: “don’t go to that school,” or “don’t take out those student loans” and he or she didn’t listen?
They wouldn’t be the first child to ignore their parents’ advice, and they won’t be the last.
But why should you now have to sacrifice and pay off an obligation that you specifically warned them against incurring?
Under this scenario, as hard as it might be, you should say “No” and stick to your guns about it. Unfortunately, your adult child now has to learn a valuable lesson and hopefully he or she will think twice about disregarding practical advice in the future.
- They were flaky
Did your child change academic majors several times, start or stop school repeatedly, or bounce from one campus to another? You know the type of kid I’m talking about; the one trying to find him or herself – and unfortunately, they’re doing it on your dime.
Chances are they’ve always been that way, but you may have had difficulty saying “No” or admitting to yourself there’s a problem.
But if you keep footing the bill for a flaky, grown child, the cycle of parental dependence will never end. Say “No” and begin the weaning process. I realize it’s difficult, but it will ultimately help your son or daughter gain maturity and financial independence.
You can also aid them in other, non-monetary ways: like helping them rehearse for job interviews, providing them with networking contacts, or passing along personal finance articles and books, such as Zero Debt for College Grads (shameless plug!).
- You simply can’t afford it
Another scenario under which you should say “NO” to your kid’s student loan payments is anytime you just don’t have the money to swing it.
I know that parents will do anything and everything to “make it happen” for our children, including cutting back on our own food, medicine, entertainment expenses and more.
But extensive cost-cutting that changes your quality of life is excessive and not in your best interest over the long run. Better to be honest and tell your child that you just can’t afford to pay off their college debts.
More specifically: tell your son or daughter candidly how making their student loan payments has affected or will affect you. Does it mean you won’t be able to buy the same groceries, will you have to make minimum payments on your credit cards, or will it curb your social life? They should know the truth about your situation and not just assume that Mom or Dad is all good.
- You’re sacrificing your retirement
One scenario that should also create a “No” reply from you – albeit a loving “No” – is when you find yourself reducing or eliminating your retirement savings in order to pay your adult child’s student loans.
Read: Would it Make Sense to use My Retirement Savings to Fund My Master’s Degree?
That’s a big red flag and setting yourself up for economic catastrophe down the road.
Most people already don’t save enough for retirement. By taking on student debt that impacts your ability to plan for retirement, you’re actually doing yourself and your child a disservice.
If you aren’t financially stable and on solid ground in your Golden Years, then you’re probably going to wind up going back to that same child for money or other financial help in the future. And while some cultures have an expectation of parental support by the children, most older people in America don’t want to be financially dependent on their kids.
Additionally, even if you’re kid wasn’t hard-headed or flaky, or you’re not threatening your current finances and sacrificing your own retirement, sometimes, it’s simply time to cut the apron strings. So, if you’re thinking: “there was the pandemic” or “inflation is raging” or “the economy is so uncertain right now,” just stop making excuses and see things with a clear head.
Listen, there’s never going to be a “good time.” Sometimes, you just have to say “No” in order to make an adult child start acting like an adult and stand on his or her own two feet.
Life doesn’t hand us all black-and-white, clear-cut issues. So naturally, there are some instances where it’s less obvious about whether paying off a child’s student loans is a good idea.
Here are three scenarios where you might say “Maybe” to covering your adult kid’s student loan bills.
- Your child is pivoting
Assume you have a generally responsible, mature son or daughter – but he or she is now trying something new or went to college and incurred debt to pivot to a new career or line of work.
If you know that you basically have a hard-working, conscientious, and sensible child, but they need help with their student loans, this is a circumstance to entertain possibly providing financial help.
There’s nothing wrong with people doing something new or different in life. Thus, you may say “Maybe” to paying your child’s student debt under these conditions. You just don’t want to keep funding a flaky child who changes their mind like the seasons change.
- Your child is upskilling/re-learning
A related scenario is when an adult child took on college loans in an effort to boost their skills or gain a deeper educational background in their chosen area. Maybe they went into a degree program for a promotion on the job.
Or perhaps you had a kid who initially earned an undergraduate degree, worked for a year or two, and then went to graduate or professional school (like law school or medical school) in order to advance their careers or further climb the corporate ladder.
Knowing that your child is on the right track, but possibly in need of financial help, you might broach the idea of covering some or all of their student loans – if you can afford to do so.
- You welcome joint responsibility
Finally, for some parents, the potential to share the obligation of college costs is a welcome scenario. Under this situation, the obligation is not entirely yours, nor entirely your child’s. Rather, you come to a meeting of the minds about how much you can reasonably cover and why it would be your honor or choice to do so.
Communication is key in this circumstance too, as you’re letting your child know that you are happy to help – as long as he or she is also first helping him or herself.