Whether you’re a recent graduate or several years into your working life, student loan payments can make it difficult to get a handle on your finances. If money is especially tight, you may be considering the options you have to help make ends meet. And, for many people, one of those options is likely turning to mom and dad for assistance.
Yet, even among family, asking for money can be tough. You might be worried that a conversation on the topic will be awkward or even spark an argument. Or, as an independent adult, you could be wondering whether it’s an appropriate discussion to have at all.
To ensure things go smoothly, it’s important to think through your approach.
What to Consider Before Approaching Your Parents for Money to Pay for Your Student Loans
The first thing to consider before asking your parents for help is whether they can afford it.
Your parents could have debt of their own, owing to things like a mortgage or even your education, which may make it difficult for them to extend you a line of credit. And, even if it appears that their finances are healthy, you should take into account that they are in an entirely different stage of life and are, thus, likely to view things in a different light.
Many parents, for example, prioritize their children’s needs early in life and, in doing so, fall behind on retirement savings. After their kids graduate from college, they plan to divert more of their income to a retirement savings account.
Additionally, it’s possible that they have personal goals of their own, including travel or the purchase of a second home. The existence of these goals doesn’t always mean that they’ll be unwilling to help you out, but can certainly affect how they feel about writing you a check.
The Right Way to Ask Your Parents for Money
If you decide to go ahead and ask for help with your finances, there is a right way and wrong way to have this conversation, according to the experts.
Randi Salko, a former managing director for big financial services organizations such as Credit Suisse and the current founder of She’s Fit To Lead, advocates approaching the topic with humility. “Millennials have a bad rap for their sense of entitlement,” she says, “Prove it wrong. Make it clear that you understand that there is no expectation that they will say yes and in no way are they obligated to give you money.”
It’s also important to be specific, says Salko. You should be prepared to not only discuss, but to put in writing, the terms of the agreement, she says. This means clarifying if and when the money will be repaid, over what period of time, and if the lender (your parents, in this case) will receive interest on top of the principal.
This is a sentiment echoed by others.
Sally Elizabeth, Dispute Resolution Team Leader at PeopleClaim.com, says that her organization receives quite a complaints about family members who renege on informal loans or even co-signed student loans.
“The only way a student or graduate can decently ask for money is by preparing a loan repayment schedule and agreement,” says Elizabeth, “By the time you graduate high school you should be sufficiently mature and independent not to expect hand-outs.”
What Are the Alternatives to Asking Mom and Dad for Money?
If you’re unable to make your student loan payments, there may be other options to consider apart from asking your parents for help.
With federal student loans, there are an array of repayment plans that are tied directly to a borrower’s income. Under plans like REPAYE, your monthly payment could be as low as 10 percent of your discretionary income which, for many borrowers, will turn out to be far less than what they’d pay under the Standard Plan.
When it comes to private student loans, there are fewer options, but you’re not entirely without them. You can certainly speak to your lender about a more flexible repayment plan, though they’re under no obligation to offer you one. In some cases, however, you can spread out your payments over a longer period of time (making each individual payment a lesser amount) by taking out a consolidation or refinancing loan.
Asking for money can be difficult and awkward, even among family. To make things easier, approach the conservation with respect for your parents’ financial obligations and life goals. To set everyone’s mind at ease, propose a written agreement with clear terms for repayment. If your parents decide to gift the money or forgive the loan, that is up to them, but you should otherwise intend to honor the contract.