When a parent sees a child in trouble, it’s instinct to step in and help. So it’s not surprising that many American parents financially support their adult children.
Sixty-one percent of parents say they’d helped their grown child in this way in the previous 12 months, found a Pew Research Center survey. In fact, this was the most common form of parental support, given more often than help with child care or housework.
But when their adult children are facing big student loans, throwing money at the problem isn’t always the answer.
Parents are more likely to have more demands on their finances, from a mortgage, looming retirement, or their own debts. Many can’t afford to help out monetarily. Other parents might see the importance of the experience and independence their child will gain as they handle this debt without financial assistance.
But there are ways a parent can help their child’s goal to pay off student debt without putting their own hard-earned funds on the line. These smart strategies can knock months off student loan repayment, and can also help graduates practice smart money management.
1. Curb living expenses
Parents can be a resource to help ease costs of living. If parents help their adult children get ahead of living expenses, this frees up money to funnel toward student loan repayment. There are several ways to do this without paying any more than parents already do.
An adult child could save $50 or more each month with a weekly meal at a parent’s home (even more if they take home leftovers). Doing two loads of laundry a week at a parent’s house instead of hitting the laundromat could save $20 or more a month.
2. Offer child care
Providing free child care for grandchildren is a common way that parents support their adult children, as shown in the Pew survey results.
Taking grandchildren for the occasional night out can free up $40 or more that would’ve gone to a babysitter. Watching grandchildren a couple nights a week could free up the adult child to take on a second job or work on a side hustle to grow income.
Retired parents willing to offer all-day childcare a few days a week can give substantial relief from childcare costs. The average cost of full-time, center-based daycare is a whopping $976 a month — being able to redirect some of that spending to student loan repayment could shave months off the life of the loan.
3. Teach a new skill
In addition to helping lessen monthly costs, parents can also lend their skills to help their adult children spend less and be more self-sufficient. (You’ve probably already done a lot of this kind of teaching over the years.)
If Mom knows a lot about car maintenance, she can show her college graduate how to change their own oil and save some money. Dad could give a walkthrough of his favorite cheap meals to help his debt-laden child cut down on eating expenses.
4. Explore student debt repayment options
Many graduates facing student debt might not have a clear picture of how much they have, how long it will take to pay off, or what they’re paying on interest. Having a knowledgeable parent sit down and review their student loans can help grads wrap their minds around their debt and figure out how to effectively pay it.
Parents can also help their adult children research different student loan resources, repayment plans, loan forgiveness, or other options to identify opportunities the graduate might not be aware of.
5. Rework the post-college budget
Central to an effective student loan repayment plan is an everyday budget that works.
Parents can help graduates analyze their income and expenses to figure out where they can cut back. They can also talk kids through important financial decisions that come with setting a budget, like how to prioritize important financial goals.
6. Boost their professional profile
For some graduates, keeping expenses low is the problem. For others, not having enough income is the root of struggles to repay loans. Parents can be an important resource to help new grads increase their earning potential.
Parents can use their network to find job opportunities for which their graduate might be a good fit, and can even put in a good word on his behalf. Graduates can also benefit from their parents’ professional experience by asking parents to review their resumes or give feedback on their interviewing skills.
There are a lot of ways parents can step up and support their grown children as they work toward the worthy goal of eliminating student debt. Sometimes, the best thing they can do is simply encourage and cheerlead their child through the often-rough transition from school to the real world.
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 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% 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 firstname.lastname@example.org, 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|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|