Student loans have become an unfortunate part of your routine. Another month, another payment. After thinking about options for financial help, the most obvious answer hits you — maybe your parents can help.
But is it the right thing to do? Money can be a touchy subject and you may wonder how to ask your parents for money to help out with your student loans.
Here’s what you need to know when asking for financial help from parents and what things to consider beforehand.
What to consider before asking for financial help from parents
Money can be a sensitive topic and now that you’re a full-fledged adult, asking your parents for money can be tough, embarrassing, and awkward.
Before asking your parents for money, first consider their financial situation. You may want to avoid asking for help if:
- Your parents have their own debt
- Your parents’ income is lower than yours
- Your parents are behind on saving for retirement
If you think, given your parents financial situation, that they might be able and willing to help, it doesn’t hurt to ask. If they agree to help out financially, it’s crucial to come up with a plan together that works for both parties.
Having the talk: how to ask your parents for money
Pick a good time to talk to your parents about your situation. If possible, strive to have the conversation in person. Be honest with them about your situation and ask politely if there’s any way they would be willing to help out financially with your student loans.
At this point, the ball is in their court and you should await their response.
If your parents are open to helping you out financially, here are some potential ways they can do so:
- Your parents agree to cover a one-time payment
- Your parents help you with a portion of your student loans each month
- Your parents give you a no-interest (or lower interest) loan to pay off your student loans
Adam S. Minsky, a student loan lawyer based in Boston, noted, “A lump sum gift/payment could work for relatively small loan balances, but there might be tax consequences for larger gifts, so parents will want to consult with their tax advisor.”
In addition, a no- or low-interest loan could help borrowers who aren’t eligible for traditional refinancing. Minsky explained, “A parental no-interest loan can be, in effect, a refinancing program for a student.”
You may also want to consider the logistics of receiving financial help from your parents. Will they help out via a check or will they make authorized payments through your loan servicer?
The latter option may be best to ensure that the money is being used toward student loans and nothing else.
But before you eagerly say “yes” to any financial help from the ‘rents, consider these questions first:
- Is it a gift or a no-interest loan?
- Are your parents expecting something in return?
- Will this financial help motivate you to keep going or will it be a band-aid on your progress?
- Will it negatively affect your parents financial situation? (such as retirement, savings, etc.)
- Will your parents be subject to a gift tax?
Answering these questions is an important part of the process, ensuring that you’re all on the same page. If there’s any confusion or miscommunication, it could cause unnecessary friction between the people you love the most. #notworthit
“People should consider the family relationship as well – owing money to your mom may be better or worse than owing money to a bank, depending on the relationship,” said Minsky, adding, “but it’s certainly going to be different, and everyone involved needs to be aware of that.”
Your parents could also just flat out say “no,” which you should be prepared for. If that’s the case, don’t harbor any ill feelings or ask why. Instead, you can look into other options such as an income-driven plan.
Pros and cons of asking your parents for student loan help
If you’re curious how to ask your parents for money in order to pay back your student loans, clearly consider all the pros and cons before asking and before agreeing to any financial help.
- With your parents help, you could end up paying less toward your loan.
- You could get a more affordable loan from your parents, saving you money on interest.
- You could free up some money to pay bills or save for other financial goals.
- You could shorten your repayment time and get out of debt sooner.
- Depending on your relationship with your parents, owing them money could make your relationship worse.
- You may put your parents between a rock and a hard place financially — some parents want to help and may say yes even if it’s not in their best interest.
- You may feel like a child getting help from your parents.
- While extra help can inspire you to get out of debt, it could also make you complacent.
If you’re wondering how to ask your parents for money, use this guide as a point of reference before moving forward. Think about all the pros and cons and make sure you and your parents are very clear about expectations, as well as whether providing you help makes sense for them financially.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.57% – 6.97%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|