As young Americans struggle with high costs of living and salaries that haven’t kept pace with inflation, some of them rely on loans to make ends meet.
Nearly half (46%) of Gen Z between the ages of 18 and 27 depend on financial assistance from their family, according to a 2024 report from Bank of America.
What’s more, even though some parents are willing to help their kids out with cash, those loans don’t always come without strings attached — sometimes in the form of interest.
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Financial media company MarketBeat.com’s new report, which surveyed more than 3,000 parents, found that an increasing number are charging their adult children interest on family loans.
“The Bank of Mom and Dad has always been generous, but even generosity comes with boundaries,” says Matt Paulson, founder of MarketBeat.com. “What’s striking is that while most parents don’t expect repayment — and certainly not at commercial interest rates — inflation and rising costs are starting to reshape how families think about money.”
The average interest rate charged by parents was 5.1%, according to the data. That’s still well below the costs their children might incur elsewhere: The average personal loan rate is 12.49% for customers with a 700 FICO score, $5,000 loan amount and three-year repayment term, per Bankrate.
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Only 15% of parents would be comfortable with lending their kids $5,000 or more at one time, according to MarketBeat’s research.
Family loan repayment terms can also vary significantly by location. The top five toughest state lenders based on the interest rates parents charge were Nebraska (6.8%), Oregon (6.8%), Mississippi (6.5%), Georgia (6.4%) and Arkansas (6.3%), the report found.
Parents in Delaware and Maine tended to be the most lenient when it came to charging their children interest on loans, with 2% and 4% rates, respectively, according to the findings.
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Many parents who expect repayment also have a fast-tracked timeline in mind. Twenty-one percent anticipated seeing their loan repaid in one month, 15% within one year and just 8% more than a year later, per the survey.
Although 59% of parents reported being happy to help their kids with money, 27% said they would only do it if necessary, and 4% admitted to feeling resentful.
In many cases, family loans don’t just provide financial support — they’re also “emotional transactions that test trust, responsibility and family dynamics,” Paulson notes.
As young Americans struggle with high costs of living and salaries that haven’t kept pace with inflation, some of them rely on loans to make ends meet.
Nearly half (46%) of Gen Z between the ages of 18 and 27 depend on financial assistance from their family, according to a 2024 report from Bank of America.
What’s more, even though some parents are willing to help their kids out with cash, those loans don’t always come without strings attached — sometimes in the form of interest.
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