Should I help my mother pay off debt?

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Baxxter
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Should I help my mother pay off debt?

Post by Baxxter »

I'm a 29 y/o 1st generation college student.

When I first enrolled in university in 2009 my mother agreed to pay for the first year - I would foot the other three. During my first year I went to an expensive out of state school, tuition was roughly 40k. After my first year, seeing the price of stay out-of-state tuition and recognizing the quality of the education wasn't worth that amount of money, I transferred to the (more highly regarded) state school in my home state and received in-state tuition while completing my degree over the next 3 years.

I consider this transfer to be one of the best financial decisions of my life, saving me potentially $100k+interest in student loan debt - not to mention the education was better.

My mother made the same agreement with my brother, who received some scholarships to attend an out-of-state school for about 10k in his first year. So all total my mother took on about 50k in student debt for my brother and I, the bulk of which on my behalf.

Flash forward to 2019-2020. I'm fully employed. I have paid down all of my student loan debt (from ~20k after 3 years in-state). My wife and I, with the help of a small inheritance have managed to put aside roughly one-year's salary in an emergency fund. I contribute the max to my 401k and to my Roth IRA. The only debt we have is our house, which we just refinanced to a 15yr mortgage @ 2.85% interest, we have about 190k left to pay on the house.

I don't know all the details of my mother's finances, but I do remember her having some pretty bad credit card debt growing up. She is fully employed, 61 y/o. I think she has about 600k in her 401k. She'll probably work for another 5-8 years if her company continues to do well - she's at the height of her career at her age. Unfortunately however, she hasn't paid down the student loan debt that she accrued on behalf of myself and my brother. I called her this week and apparently it's sitting at about $40k, not much better than when she started paying on it 10 years ago. These loans are at about 4.6% interest. She admitted that she was too proud to let me pay for the loans, but that we might be able to reach some kind of agreement.

Having paid off my school debts, built an emergency fund, contributing in full to my 401k and refinancing the house... I'm finding that I kind of lack a financial goal right now. Yes I want to hit retirement milestones, but really I feel like I'm on cruise control. Not a bad thing, but having been actively pursuing financial goals for the last 5 or so years, I have found it to be a motivator.

The details of any kind of agreement that my mother and I might come to are still vague. It might include helping her consolidate debt or cash-out refinancing her mortgage at a low rate to pay the student debt down. It might include a lump sum from me, or monthly payments, or both. I need to get a closer look at her finances before I know what an agreement looks like. This whole situation assumes she doesn't have any higher interest debts that she's dealing with (which I do not know).

The question is...should I take it upon myself to contribute? Does anyone have any advice on approaching this situation? How to work with family to help contribute to their debts. Should I feel personal responsibility toward the debt that my mother took on on my behalf (I don't really - but would I do the same if my mother was facing credit card debt)? My mother has been working hard over the last 15 years or so to turn her financial situation around and she's done a good job. If I can help her now it seems like it would help her gain momentum in these last years of her career to improve her outlook in retirement - which I think would be good for the whole family.

Or am I going to regret getting involved?

Thanks for reading, thoughts?
magicrat
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Re: Should I help my mother pay off debt?

Post by magicrat »

It sounds like you want to pay off the debt. Discuss this again with your mother and let her know that you are willing to pay down or off the debt (up to whatever level you are comfortable with). It's up to her whether to accept. If she accepts, work with her to send payment to the loan company. I don't see any reason you need to know anything else about her finances in order to make this decision (unless she wants to share).
Cigarman
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Re: Should I help my mother pay off debt?

Post by Cigarman »

My parents put 6 kids through college with no expectations of being paid back. My father worked two jobs while my mother took care of everything at the house including running us around town. He passed in 2017 and she is living with stage 4 breast cancer at this moment. If I were in your shoes, I would pay off the money she borrowed to put you through college the first year and call it even. The satisfaction you, and she, will receive is immesurable. Just my 2 cents worth.
MotoTrojan
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Re: Should I help my mother pay off debt?

Post by MotoTrojan »

Your wife’s opinion will matter here more than anything, especially since I presume the inheritance was from her side. Maybe you can convince your mother to let you pay off $30K plus whatever interest that portion has accrued; keeps this equal between siblings at $10K each which could help her pride issue, and not guilt your brother.
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MrBobcat
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Re: Should I help my mother pay off debt?

Post by MrBobcat »

In effect your mother agreed to pay 1/4 of your education and ended up paying more than half because of your choices? Anyway if you want to help her out and she's too proud I'd use that explanation as to why you feel it fair that you help her out with some of the debt.
daheld
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Re: Should I help my mother pay off debt?

Post by daheld »

I agree that it's a decision you and your wife should make mutually, but my opinion is that if your mom needs the help and you are capable, it's a perfectly benevolent and considerate thing to do.
retiredjg
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Re: Should I help my mother pay off debt?

Post by retiredjg »

Ordinarily, I'm not in favor of helping people out of their own debt. This seems like it might be an exception. But your spouse needs to be on board or this will create conflict in your family.
Nowizard
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Re: Should I help my mother pay off debt?

Post by Nowizard »

Financially, I believe most would say you have no obligation. There are non-financial benefits to helping others, however, if the circumstances suit you.

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Dandy
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Re: Should I help my mother pay off debt?

Post by Dandy »

I think you have the right idea. You are in good financial shape. It might be good for you and mom to sit down and go over her financial situation. Will she be able to support herself in retirement? How much is she contributing to her retirement? What debt and at what interest rate? Will she have health insurance in retirement before Medicare? etc.

I understand her pride in wanting to preserve her gift to you. If she is in great financial shape fine, if not you might be supporting her later in retirement. Steps taken now might save both of you a lot of money.
renegade06
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Re: Should I help my mother pay off debt?

Post by renegade06 »

I agree with the previous comments here. Your spouse needs to be on board and then I would discuss it with your mother. I think it would be a great thing to do for your mom.
JackoC
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Re: Should I help my mother pay off debt?

Post by JackoC »

retiredjg wrote: Fri Sep 18, 2020 8:21 am Ordinarily, I'm not in favor of helping people out of their own debt. This seems like it might be an exception. But your spouse needs to be on board or this will create conflict in your family.
One's own mother might be an exception to how one deals with 'people'? :D Just struck me as funny wording but I basically agree, helping your own mother with debt she incurred for your benefit would seem to be different than random relatives, not to mention non-relatives, asking for help with debt they incurred that's nothing to do with you. Not that it makes the answer automatically 'yes', for a married person especially.
BogleFan510
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Re: Should I help my mother pay off debt?

Post by BogleFan510 »

JackoC wrote: Fri Sep 18, 2020 10:03 am
retiredjg wrote: Fri Sep 18, 2020 8:21 am Ordinarily, I'm not in favor of helping people out of their own debt. This seems like it might be an exception. But your spouse needs to be on board or this will create conflict in your family.
One's own mother might be an exception to how one deals with 'people'? :D Just struck me as funny wording but I basically agree, helping your own mother with debt she incurred for your benefit would seem to be different than random relatives, not to mention non-relatives, asking for help with debt they incurred that's nothing to do with you. Not that it makes the answer automatically 'yes', for a married person especially.
I would do it. A 4.6% interest rate, while better than much, is a great return. You could offer to have mom make it up to you in her legacy (will) if fairness is a concern for her. Wouldnt she rather stay independent longer or leave more for a legacy that pay a high interest rate to a stranger? Ultimately if she runs out of money, as a boglehead, you and spouse will be in good shape to help out, but this makes it less likely.
Dottie57
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Re: Should I help my mother pay off debt?

Post by Dottie57 »

Mom went into debt to help her son have a better life. If son can pay the debt off now, do it.
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Re: Should I help my mother pay off debt?

Post by abuss368 »

I would say communication is key here with your mom and family.
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Big Dog
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Re: Should I help my mother pay off debt?

Post by Big Dog »

I agree that your spouse needs to be on board, but disagree with the poster that said you are under no obligation. While technically true, she incurred this debt on your behalf. IMO, it was your choice to attend a pricey OOS college. (Kudos for recognizing the value of the instate offerings.) At a minimum, I would offer to reimburse my mom for the extra debt that she incurred for your first year. (Again as long as spouse concurs.)

Tell your brother what you are doing and see if he kicks in a portion to help payoff his first year OOS.
pasadena
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Re: Should I help my mother pay off debt?

Post by pasadena »

Big Dog wrote: Fri Sep 18, 2020 10:55 am I agree that your spouse needs to be on board, but disagree with the poster that said you are under no obligation. IMO, it was your choice to attend a pricey OOS college. (Kudos for recognizing the value of the instate offerings.) At a minimum, I would offer to reimburse my mom for the extra debt that she incurred for your first year. (Again as long as spouse concurs.)
This. I understand it was "her decision" to pay the first year. I also understand that I'm not going to make a lot of friends, but I personally think that, given that you are now in a very good financial position - in part thanks to her - you do have some sort of moral obligation to pay your mom back now that you can. Part of it is your debt, really.
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tyrion
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Re: Should I help my mother pay off debt?

Post by tyrion »

MotoTrojan wrote: Fri Sep 18, 2020 7:39 am Your wife’s opinion will matter here more than anything, especially since I presume the inheritance was from her side. Maybe you can convince your mother to let you pay off $30K plus whatever interest that portion has accrued; keeps this equal between siblings at $10K each which could help her pride issue, and not guilt your brother.
This is what I would probably do. Offer to pay it down 30k to offset the fact that she spent way more on your education compared to your brother's. I think you said the current balance is 40k, so that would lower it to 10k which would be much easier for her to pay off.

You could offer to pay it as a lump sum if your finances support that, or $X over however many years. You could also pay it directly to whoever services the loan.
Luke Duke
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Re: Should I help my mother pay off debt?

Post by Luke Duke »

If I were in your situation I would also want to (help) pay off the loan regardless of whether or not my mother wanted me to or not.

If it were me, I would get my hands on a statement and add the loan provider to my autopay list on my bank's website and begin to make payments (or a lump-sum).
makingmistakes
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Re: Should I help my mother pay off debt?

Post by makingmistakes »

pasadena wrote: Fri Sep 18, 2020 10:58 am
Big Dog wrote: Fri Sep 18, 2020 10:55 am I agree that your spouse needs to be on board, but disagree with the poster that said you are under no obligation. IMO, it was your choice to attend a pricey OOS college. (Kudos for recognizing the value of the instate offerings.) At a minimum, I would offer to reimburse my mom for the extra debt that she incurred for your first year. (Again as long as spouse concurs.)
This. I understand it was "her decision" to pay the first year. I also understand that I'm not going to make a lot of friends, but I personally think that, given that you are now in a very good financial position - in part thanks to her - you do have some sort of moral obligation to pay your mom back now that you can. Part of it is your debt, really.
Yeah, the sense of entitlement of people just astounds me. How someone wouldn’t feel an obligation to help pay back loans for their own schooling in this situation is beyond me.
niagara_guy
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Re: Should I help my mother pay off debt?

Post by niagara_guy »

I have a slightly different opinion. Write your mother a thoughtful letter thanking her for raising a successful person, including all the sacrifices she made for you, including the college expenses. If you can, include a check for some of the money for your student loans and offer to pay back more.

From your post it sounds like mom raised a great son (and you may tell her I said so).
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8foot7
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Re: Should I help my mother pay off debt?

Post by 8foot7 »

If it was your inheritance I'd write a check today for the amount of debt she incurred on your behalf and simply explain to your wife you felt like it was something you needed to do.

If the inheritance was from your wife's side, I'd work it out with her if you feel strongly about contributing. Your wife may not lack a financial goal, for example. She may also have parents that might need assistance.

As for those saying you should have a sense of obligation, I don't think obligation is the right word. It sure isn't entitlement, for goodness' sake. This was a parent paying for a year of school. What you should have -- and by posting here with this question, are demonstrating you have -- is gratitude perhaps, or generosity. If you can return the favor she did for you, that's great.

Speaking as a parent, I wouldn't enter into the deal your mother made for you if I expected my son to pay me back. I'm a father, not a bank line of credit.
Last edited by 8foot7 on Fri Sep 18, 2020 12:15 pm, edited 1 time in total.
flaccidsteele
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Re: Should I help my mother pay off debt?

Post by flaccidsteele »

This sounds like moral hazard written all over it...
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galawdawg
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Re: Should I help my mother pay off debt?

Post by galawdawg »

A much different situation than I expected from the title.

While the $40k debt is in her name, it really is your debt. If she had to borrow that $40k, by all means pay her back if you are able. There is no reason not to and it would be an honorable and considerate decision! :D
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Re: Should I help my mother pay off debt?

Post by randybobandy »

I would pay her the difference between what she paid for your first year and what you paid for one year at the cheaper school.

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mmmodem
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Re: Should I help my mother pay off debt?

Post by mmmodem »

We are currently supplementing my parents living expenses. They sacrificed for us and we as their children are obligated to help them now. If I was in your situation, I would pay off all your mother's students loans as long as she and your spouse are okay with it. Then I would hit up your brother for his portion if he is able to help. But either way, I would pay all the student loans off if I could. Your mother made a nice gesture and you have the ability to return the favor.

We once tried to convince them to stop working and retire. We could give them a stipend equivalent to what they were making but this crossed the line. They will graciously accept help paying their bills, though.
Doctor Rhythm
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Re: Should I help my mother pay off debt?

Post by Doctor Rhythm »

3 words: She’s your mother.
Wanderingwheelz
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Re: Should I help my mother pay off debt?

Post by Wanderingwheelz »

My wife and I paid off her parents student loan as soon as it became obvious we were in far better financial shape than they were. My wife was about 36 at that point, if I recall.
Frugalbear
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Re: Should I help my mother pay off debt?

Post by Frugalbear »

Hi Baxxter,

If I were in your shoes:

1. Talk to your wife about how you feel about the situation and weigh things out.
**If you are both agree this is a good idea then to number 2**
2. Talk to your Mom and let her know how well you are doing and that you would like to help and that you appreciate greatly what she has/is doing for you.

If you cannot help your mom with this, I am sure there will be other ways down the line you will be able to repay/show your appreciation.

I think your mind and heart are in the right places. When you start going down this path of saving and maximizing, it is tough ( at least for me) to get out of battle mode and remember there are more important things in life than money.
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Re: Should I help my mother pay off debt?

Post by Gnirk »

Dottie57 wrote: Fri Sep 18, 2020 10:46 am Mom went into debt to help her son have a better life. If son can pay the debt off now, do it.
Absolutely!
neverpanic
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Re: Should I help my mother pay off debt?

Post by neverpanic »

makingmistakes wrote: Fri Sep 18, 2020 11:40 am Yeah, the sense of entitlement of people just astounds me. How someone wouldn’t feel an obligation to help pay back loans for their own schooling in this situation is beyond me.
I, too, was shocked reading most of the prior responses. I understand pride and family tradition, but OP's mother would not have that large debt but for the son's decision to ask for and accept the money. My family enabled me to graduate with no debt, but no one took on loans to do so, nor would my personal pride have allowed it.

The fact that she still owes roughly the same amount today as she did 10 years ago - despite having received no benefit from it - is telling.

OP - inform your wife and inform your mother that you intend to make things right. Your case is a no-brainer.
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Pu239
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Re: Should I help my mother pay off debt?

Post by Pu239 »

OP - I would leave your wife's inheritance alone and work to pay down/off your Mom's student loan debt over time in cooperation with your wife and Mom. I agree helping Mom is the right thing to do.
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Willmunny
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Re: Should I help my mother pay off debt?

Post by Willmunny »

I might suggest sitting down and coming up with a plan of action that you, your wife, and your mother all feel good about. Involved both of them in the conversation and see what ideas they may have to accomplish a common goal.

At her age, this debt is likely hindering her ability to save more for retirement. If you don't have the cash right now to pay it all off, maybe some combination of you paying some and your mom paying the balance through a relatively small 401(k) loan taken out by your mother to extinguish this thing in 2020 makes sense. Then perhaps you can help your mother repay the 401(k) loan with your ongoing earnings. I am normally not a big fan of 401(k) loans, but this debt is likely preventing her from saving more in her 401(k) and it seems like it is a good time to knock it out if your wife is on board.
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