How, and how much, to help a college grad

By Michelle Singletary

They got their degree. Some have jobs. Some don’t. Or they are underemployed, working at jobs they don’t particularly like.

Along with a degree comes a decision for many parents. What if your college graduate needs additional financial support? Should you help, and if so how much is too much?

An online survey of more than 500 students and 500 parents found that about 65 percent of parents expect to support their children for up to five years after they graduate. And 68 percent of students expect financial support from their parents, according to the survey conducted by Upromise for Sallie Mae.

So what’s the right way to help a young adult launch without creating an extended dependency?

The key word is discernment. There isn’t a one-plan-fits-all approach to giving financial support to adult children. You have to know your child. There is a fine line between helping and enabling. Here are some key financial areas and my thoughts on how to give a hand up and not a handout:

— Rent: Should you supplement your graduate’s housing or charge rent if he or she starts living at home?

Twenty-four percent of parents would charge rent. And interestingly, 48 percent of students would pay rent for their old room — not that they will be thrilled about it.

If your adult child is gainfully employed, you could still let him or her live at home for a year or two to save and build a cushion before launching. Once they’ve got a good emergency fund, that’s a good time to cut the financial cord. If you see more spending than saving, then charge for their housing.

If your child has a lot of student loans, living rent-free can help get rid of the debt a lot faster. In this case, you’re helping to speed up their financial freedom.

If your graduate is still looking for a job or is underemployed and has been otherwise financially responsible, I can see helping with rent if you can afford it. But be clear about how long and how much you are willing to give.

Let’s say the graduate is living at home but the job hunting is lackluster. There’s nothing like a rent bill to put the pressure on to look harder.

I had a nephew live with me once. He was a wonderful young man but he wasn’t looking for a job hard enough. So after giving him some grace for a few weeks, my husband and I started charging him rent. It was a modest amount, but the growing past-due bill was his inspiration. He got a job and also paid us the back rent.

Be careful of supplementing rent for a graduate not living at home. If you help pay the rent, your graduate may choose a place he or she can’t really afford.

Cellphone: Should you keep your graduate on your plan? If it’s cheaper to do so, I don’t see anything wrong in letting your child stay put for a while. But split the bill if he or she has a good job.

Car payment and/or auto insurance: Should the graduate take over car expenses?

Again, the key to helping and not enabling is to know your child’s financial situation in addition to his or her money-management history. Graduation is a time to step into adulthood. You can help ease the transition to independence, but you also don’t want to make it so easy that your assistance is taken for granted. Or you don’t want to help your child establish a habit of living above his or her means. Ask how much your graduate is making. If it’s a living wage, he or she needs to start living off of it.

Student loans: Should you help make the payments?

For many graduates, their student loans will be manageable. But for some, it’ll be a heavy burden. In the latter case, don’t rush in to bail them out. Let them figure out how to budget around the debt. You can help them sort through the various payment options.

I’ve got two more years before my oldest child graduates from college, but already we are having “the talk.” The one where we lay out what we are willing to do for her financially after she finishes her undergraduate studies.

There isn’t a rule book for how to help an adult child or when that help is too much. We are watching and taking notes. The level of financial support will depend on how much she is trying to help herself.