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Is it a Good Idea to Help Adult Kids Pay Down Debt?

Graduating without debt in Canada is a laudable feat. But, for those grads who couldn’t avoid debt when they were in school, should parents take on the responsibility of paying it back? Further, should they continue financially supporting their adult children at the expense of their own financial stability?

Just a case of history repeating itself?

According to the Federation of Post-Secondary Educators, B.C. students can expect to graduate with $35,000 in student debt — that figure has increased 350 per cent since 2002!

Although measures are being taken to reduce the amount of interest students will pay on their debt, owing that much before you begin a career can seriously hinder your goals.

This is where parents step in, heroically, to offer financial assistance or a place to stay while their child gets on their feet. This is also where the facts get interesting.

In 2014, 32.1 per cent of 18-34 year olds were living at home with their parents, which is comparable to 1940 when 35 per cent of adult kids lived at home. Similar stats were found in 1880, showing 30 per cent of adult kids residing at home, making this living situation the most historically common.

How to prepare your child for financial independence

Whether your adult son or daughter is just beginning their post-secondary education or they’ve already graduated, parents can take steps to help prepare them for life on their own. It may mean cutting off your financial contributions and putting your own financial goals ahead of your child’s.

The reality is, your earning and saving years are limited and theirs are just beginning.

Here are a few ways you can support your child during school and beyond — advice from parents who have been there:

  • Teach kids how to manage their own money and don’t just give it to them. Talk about the importance of following a budget, balancing wants vs needs and making sure bills are paid on time to avoid interest charges.
  • Strongly encourage them to work part-time while attending school. This will cut down on student loan debt and allow them to learn hands-on what it takes to manage money and time.
  • Be prepared for your child to have to live at home to pay off their debt while they find gainful employment. It’s a good idea to discuss this with your child now so you can set expectations for what it might look like if they move back home.
  • Help your child explore majors that give them job opportunities that are realistic for the lifestyle they want to have.

How to keep your child’s debt to a minimum during and after school

Graduating without debt may seem unattainable, but it’s entirely possible when you have the right tools. Steven Van Sluytman, from the blog, Money We Have suggests applying for scholarships to offset student debt and taking on co-op placements to increase experience. Students can also consider student tutoring for pay or taking on the role of teacher’s assistant. Some other ways to keep student debt low include:

  1. Get your spending under control – Easily track your monthly expenses using an app like com or Wally. It’s amazing how fast those early morning lattes and monthly subscription services add up.
  2. See a professional – Carrying debt puts a damper on all your other amazing financial goals. If it’s getting harder to manage your debt, check out your debt relief options or speak to a Licensed Insolvency Trustee about your debt load. Recognizing the problem before it becomes overwhelming will give you more options to get back on track.
  3. Use credit wisely – Building good credit takes time and it also means using Talk to your child about interest rates and how to choose a credit card that offers competitive rates or rewards. It’s best to use your credit card for small recurring expenses such as subscription services that can easily be paid off each month.

Did you pay for your child’s tuition or help them repay student debt after grad? Share your tips with us via Twitter using the hashtags #BacktoSchool #DebtSolutions #DebtHelp