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42% of parents have paid a child's debt

Before bailing out offspring, ask yourself whether you're really helping.

By Teresa Mears Dec 9, 2009 6:12PM

A new poll by found that 42% of people with adult children have paid a debt for their children at some point. But should they?


The debts most commonly paid off were auto loans (40%) and medical debt (37%). But the survey also found that parents had paid utility debt (31%), credit cards (30%), student loans (29%) and mortgages (11%).


"It used to be that kids would be embarrassed to ask for help. Not anymore," Michael McAuliffe, president of Family Credit Management, a Chicago nonprofit credit counseling agency, told’s Connie Prater.


The current generation of parents has always provided more help to their children than their parents’ generation did, helping with everything from homework to science projects to college essays and beyond.

This trend, coupled with changes in the economy, has found many parents continuing to help their children financially long past college. The staggering rates of college loan debt, plus job losses, have increased the financial struggle for both parents and adult children.


But should parents be paying their children’s debts? In the article, McAuliffe offers several questions for parents to ask themselves when weighing whether to help out an adult child.

  • Can you afford it? If you don’t have a sound retirement plan in place, you probably can’t afford to help your children significantly. "If you don't have your retirement on track, then to me, that's the end of the discussion," McAuliffe says.
  • Does the child have a financial rescue plan for himself? Help your child look at the big picture. If he doesn’t have a job, paying a mortgage payment for him isn’t going to help in the long term. Should he sell the house? Search for a different kind of job?
  • Are you making a gift or a loan? If you’re lending your child the money, Mcauliffe suggests using a social-lending, or peer-to-peer site, which sets up a formal payment plan and loan agreement.
  • Has your child cut expenses and made sacrifices before coming to you for help? If your child is still going out for expensive meals, buying all the latest electronic gadgets and otherwise being financially irresponsible, does he really need your help?
  • Can you help your child in another way rather than with money? Perhaps you can baby-sit while she works, let him move in with you, provide job-hunting help or otherwise help your child get his financial house in order.

Under what circumstances would you pay your children’s debts? Or ask your parents for help? Is young people’s failure to launch a fault of the economy or of parental expectations, or a little bit of both?

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