Financial Questions for Parents & Their Adult Children

How do families cover the high cost of college for their children, assuming mom and dad have the resources and desire to do so? Likewise, should parents assist their offspring with car insurance, health coverage, and down payments on a first home, even when the kids are still living at home? Those are a few of the money-related issues that families in the 2020s are sorting out. Everyone has a different approach, particularly when it comes to paying for a college education. Consider the following situations and proposed solutions.

College Expenses

One of the oldest money-related questions facing moms, dads, and their older children is how to pay for college. There are as many approaches as there are people, but several solutions have gained traction in recent years. Getting a four-year degree is a major challenge, but covering the related costs is an equally difficult feat. However, for students applying for loans on their own, it can be nearly impossible to get approved without a cosigner. What happens when Mom and Dad refuse to do so?

How can young adults overcome the financial hurdle of applying for college loans with no cosigner? There are some creative tactics, including scholarships, low-cost online institutions, and working for several years to build up a solid credit history. It’s important for students to brainstorm how to deal with educational expenses if their parents decline the request to serve as cosigners on loans.

Health Coverage, Rent, & Auto Insurance

Many can usually keep their adult children on auto and health policies until the kids move away from home or reach the age of 25, but laws differ based on where families reside. Some parents don’t like the idea of keeping kids on their policies and prefer to teach youngsters how to obtain and pay for policies of their own, regardless of the youngsters’ income or financial situation. 

The age-old question of how to deal with rent is a source of much family discussion. In generations past, it was common for anyone over the age of 18 to pay at least a stipend amount of rent while living at home. Today, mothers and fathers rarely charge rent if their children have yet to graduate from college.

Down Payment Support

There’s controversy about the subject of down payment support from parents. Some believe that young people should go it alone when purchasing their first home. Others make the argument that the housing market is more restrictive than ever, so if they hope to get a good mortgage rate, buyers need all the assistance they can get. In certain cases, moms and dads supply a percentage of the down payment on a property after their child has saved a designated amount while working a full-time job for a year or more.

Otherwise, most young buyers wouldn’t stand a chance of qualifying for a mortgage or coming up with the requisite 20% down payment amount. Even on a budget house, that can amount to as much as $50,000 up front, which few youngsters have. A compromise system is one where parents lend money to their children at low rates or in no-interest agreements drawn up by a third party.