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Should Parents Bail Out Their Recently Graduated Kids?

Parents of recent college graduates may seem like they are in a better spot than most — they aren't ready to retire and have time to make up for losses in their retirement portfolios, many have made significant headway into their mortgages, and they don't have dependents that need groceries or gas. But the economy isn't letting anyone off easy right now, including this demographic.

According to The Wall Street Journal, many American parents with college-aged kids are battling whether or not they should bail out their offspring. The average student loan in the past year was $22,000, and entry level salaries for new grads are not keeping up with the rise in student loans. On top of their student loans, many new grads come out of school with credit card debt, and without the means to pay these off there's a risk of default and ruined credit.

Credit counselor Bruce McClary observes, "Similar to questions about the overall economy, many parents are wondering, should I bail my kid out? Or let him claw his own way, let him fail?" What do you think?


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cambrianoelle cambrianoelle 8 years
"Here's a new concept: don't buy stuff you can't afford...and don't pick frivolous majors you can't actually get a job doing." NurseDeAnna, what exactly is a frivolous major? you can get a job doing anything, even without going to college. But usually, and I'm just generalizing here, people pick majors they are interested in. No one's going to spend college tuition studying something "frivolous." But I do agree that people shouldn't be irresponsible and buy things they can't afford... that's a pretty simple concept.
Spectra Spectra 8 years
I graduated with $15000 in student loans and I didn't get a job right away out of school. My parents did let me live with them for a brief period of time so I wouldn't have to worry about rent. Then I got engaged about a month after I graduated, so they offered to let me live with them until I got married because they thought it would be ridiculous to try to find a place to rent for less than a year. I was grateful and it helped a lot, but when my brother (who's 22 now) graduated from high school, they never forced him to go to college or get a job and he continues to live at home to this day. He works part time at a Pizza Hut and got his driver's license revoked for owing too many fines. IMHO, they need to practice a bit of tough love and kick him out, but they probably won't. I just wish they'd realize that they're probably hurting him more than helping him by doing what they're doing. So yeah, in some situations I think a little help is fine, but when the kids start taking advantage of the situation, support needs to be cut off.
Deidre Deidre 8 years
I think it's completely situational. In an ideal world, the parents are the ones to teach their kids how to behave responsibly with money. They're the ones to fill you in on how credit cards work, how debt can accumulate, and strong methods for saving. Aren't parents supposed to be the biggest resource a kid has in learning how to become an adult? But I guess that's a little chicken-or-the-egg...I guess if this was the case, there would be a lot less need for bailouts. I think bailing out is completely situational. I agree with the posters who have said that a kid should do everything they can before resorting to Mom/Dad. But I also think that parents are responsible for helping their kids learn how to stand on their own two feet. I'm very lucky in that my parents paid for my education -- two weeks after graduating, I started my first job and have not asked them for a dime since. But, my folks were great about instilling financial independence into my values. Like I said, I'm lucky.
jkat jkat 8 years
I would help my kids with student loan debt if I could afford it. Ideally I will pay for their undergrad (state tuition ... there is no reason to go to Harvard for undergrad. Trust me). For an advanced degree (depending on what it is) I think I would make them take out loans so they feel personally invested in their education. Then, depending on how well they did in their graduate studies, I might pay their loans off for them. (I haven't decided if I will let them know about this potential pay off, or just surprise them with it... I am leaning toward surprise.) I would not help with credit card debt unless they were going to be put in jail or have to file for bankruptcy. There is no reason for cerdit card debt when you are a student. It is just being irresponsible, and they have to learn their lesson on that. I learned my lesson from watching my parents deal with credit card debt their whole lives and have never carried a balance on any card. Just don't buy what you can't afford.
CoralAmber CoralAmber 8 years
Parents can help if they want to (and can afford to), especially if they want their child to have a good credit score. I would like to think most parents know the difference between a kid who has a credit card problem or one that has debt because of standard living/school expenses. I am 100% responsible for my own student loans, but I did have a little bit of credit card debt from my senior year when I didn't have a job because of difficult classes. I didn't want them to pay it off for me, but they insisted because of the damage it would do to my credit score and the interest I would accrue.
syako syako 8 years
cat that is soooo true. If they stopped buying every single i-phone that came out, would they still be having financial troubles? It reminds me of a comment I read about a woman who complained she didn't make enough to put food on her table every night - when asked if she had high speed internet, she replied "yes, why?" That is mind boggling to me. Priorities, people!
CaterpillarGirl CaterpillarGirl 8 years
"only if the kid has exhausted all other options" alot of graduates/students have no idea how to prioritize, or what Need vs Want means. My own brother in law (who is 22) called us asking for for money to help him pay his rent this month, and i asked him "do you have cable tv, a cell phone, do you eat out every night, high speed internet?" and he said yes, and i said, well you dont need any of that, you do need a place to live. We gave him nothing, and he ended up being able to pay it after he prioritized his expenses.
lilkimbo lilkimbo 8 years
I'm with a lot of other people. It really depends on the situation. If a recent college graduate has an unexpected expense and his or her parents can afford to lend him or her the money, it is so much wiser than putting it on a credit card. To me, it also depends a lot on how much a person is trying. The job market is difficult right now and a recent grad may be able to get a job in retail that won't cover all of his or her expenses, but it's still a job. In the end, it really comes down to the individual situation because everyone's situation is different.
ilanac13 ilanac13 8 years
i think that it really depends on the situation that lead to getting the loan in the first place. there are a lot of times that parents will push their kids to get a student loan to pay for school, and in those cases, well i think that it should be partly the parents and partly the kids responsibility to pay for things, but if the kid gets the loan to have more money while they are in school (well a lot of kids that i knew did that) then it's not the parent's responsibility to pay it off. i'm all for the case by case thing since i can't usually put an overall opinion and decision thing over things.
NurseDeAnna NurseDeAnna 8 years
Here's a new concept: don't buy stuff you can't afford...and don't pick frivolous majors you can't actually get a job doing.
javsmav javsmav 8 years
I think parents should pay for college if they can afford it. If I have a kid, I would see it as my responsibility to make sure they get a college education. So I don't think kids should be coming out of college with that much in loans. (Of course, if the parents can't afford college, then they probably can't afford to bail their child out). Credit card debt is another thing--recent grads are on their own with that.
hippiecowgirl hippiecowgirl 8 years
I voted for "only if they can afford it," but I also think the kids should exhaust all their options before asking. I don't think parents should be obligated to do so nor should the kids expect it to be done just because.
carak carak 8 years
one of my friends is completely irresponsible with money and her parents help her out constantly. she ran up 15k in credit card debt, got that consolidated with an agency and is making payments, but then got her mom to cosign with her for a 15k personal loan that i'm pretty sure her mom is making the payments on. not to mention all the money she asked them for which she just blew on drugs and they had no idea. she dropped out of college with only a few credits left to go & her payments are deferred for now but her parents will end up paying them. i do not think she should be helped. they think they're helping but it's really making her think that she can do whatever she wants and have her parents bail her out. and she has a job. not a high paying one, but it is enough to manage all her bills if she actually budgeted her income.
kathrynliz kathrynliz 8 years
i think that every situation is different. i can tell you that i have interviewed many recent grads for entry level jobs. entry level. like, you're entering the job market. the money isn't right. ;-)
mondaymoos mondaymoos 8 years
I picked "when all other options are exhausted." I've never received MONEY from my parents to help me out when things were bad. They did give me a place to live for several months after I left my husband to get my shit together, though. I don't feel like parents have to give their children cash to bail them out.
jessie jessie 8 years
HeidiMD HeidiMD 8 years
I don't think it's fair to judge someone who needs extra help from their parents, especially when getting started. Parents shouldn't automatically do it, but I don't think any parent wants to see their child fail just because times are tough. Obviously, if you waste your money and are irresponsible, you probably deserve it less, but sometimes, situations just suck. I know my dad would help me out in a heartbeat if I needed it.
Shopaholichunny Shopaholichunny 8 years
:notworthy: dienliv. AMEN!!! Too many kids in my generation always want their parents to "bail" them out. I say you got yourself in that mess you need to get yourself out of it. (I'm talking about the unnessary frivolus spending known as CC debt) Get a job! Get off your butt! Any job even if it's at McDonald's.
lawchick lawchick 8 years
I don't think that parents "should" do it, but I don't have a problem with parents who choose to help their kids after college, either. My in-laws give us money every month to help with school loans (we have $200,000 between both of us from law school). They probably wouldn't do that if we were slacking off and not working, or living extravagently, or making a ton of money --- but they don't mind helping us as long as we're trying to make it work.
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