"The Next Bailout: Your Adult Children?" Wall Street Journal

Parents Forum
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<p>Food for thought from Work & Family by Sue Shellenbarger in the Wall Street Journal today :</p>

<p>"As Washington unfurls its financial-market rescue, more families are weighing private bailouts of their own – of young-adult children burdened by debt.</p>

<p>Many young adults are heavily leveraged. Average student loans among the two-thirds of college undergraduates who have borrowed rose an estimated 5% in the past year alone, to $22,000, says the nonprofit Project on Student Debt; many also have credit-card debt.</p>

<p>John SegalAs the economy weakens, starting salaries aren’t keeping pace, says Robert Shireman, the Project’s director, and a growing number of recent grads aren’t likely to find jobs at all. As a result, “we’ll see some rise in defaults” among recent grads, Mr. Shireman says. That means more moms and dads will face tough questions about whether to bail out their kids, and how to structure the aid if they do.</p>

<p>“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?” says Bruce McClary, a credit counselor for ClearPoint Financial Solutions, a nonprofit Richmond, Va., credit-counseling service. The stakes are high, including the risk of default, ruined credit, lost opportunities to attend graduate school or buy a home, or even wage garnishment. Parents, too, are on the hook if they’ve co-signed for loans, as lenders increasingly require.</p>

<p>Many parents already are intervening in ways they didn’t foresee. Jay Kirschbaum took “a strong line” with his daughter when she chose to attend a private college, promising to pay only the cost of an in-state public university. “Theoretically, I don’t think the parent should ever help the child pay” debt he or she chooses to assume, says the St. Louis father. His daughter took loans and a job to pay the difference. But when government-guaranteed loans to students temporarily dried up in 2007, “push came to shove,” he says, and he stepped in with $2,000 more than planned…"</p>

<p>Link to complete article: [Work</a> & Family - WSJ.com](<a href=“http://online.wsj.com/article/work_and_family.html]Work”>http://online.wsj.com/article/work_and_family.html)</p>

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<p>Boy, if you could get away with only having to pony up $2,000…</p>

<p>I think that more young adults will be “getting their inheritance early” from Mom and Dad (and Grandma and Grandpa) if the economy goes into a long term nosedive.</p>

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<p>it says he paid 2K MORE than planned. It doesn’t say how much he ‘planned’ for.</p>

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<p>Gosh, with the way our retirement accounts are looking… I was hoping our college age kids could bail US out.</p>

<p>Just kidding, I hope.</p>

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<p>jmmom, I read an article several months ago about adults in their 40’s and 50’s who are having to move back in with THEIR parents because of economic difficulties. And I know in my case, my mother has lost a lot of money (like the rest of us) over the past few months, and I’m not in a position to help her financially. If push comes to shove, I guess she’d have to move in with us. I guess the bottom line is that families of all sorts are being stretched and are having to step in for each other.</p>

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<p>We were able to give our kids a nearly dept-free udergrad degree (one still has a small loan she opted for). I"m more worried about my parents, who have large stock holdings “to support their retirement”. What looked good on paper a few years ago may end up a tiny blip toward what they need.
At least H and I are still working and might just have to continue for another 10 or 20 or 30 years!</p>

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<p>We are still bailing them out. H just got a call from oD. “Dad, I’m going to have dental surgery, can you chip in $X since my insurance only covers half?” Sigh. She has $0 college debt and found a cool job which pays fine for a freshly minted B.Sc.!</p>

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<p>So, BB, was the answer no?</p>

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<p>Our kids are ok, but I’m worried about our parents. They basically live off of investments.</p>

<p>If the stock market tanks, I can afford to take the long view and keep working past “retirement” age. I feel sorry for all those people who aren’t healthy or young enough to work anymore, and thought they had their future all taken care of.</p>