It's no secret that college fees can be insanely expensive, with many students going into debt to get an education. Student loan debt in the United States alone totals over $1.86 trillion. On average, each borrower owes roughly $40,000. While many students turn to banks to lend them money, others are fortunate enough to have relatives who are willing to help out.
A 25-year-old has told how he planned a six-month trip to Europe to celebrate finishing his Masters. He was taken aback when his aunt asked that he cancel the trip and pay for her college fees instead. When he said "no," all hell broke loose in the family. But the cherry on top was when the aunt broke into his house while he was away. She had planned to steal items to sell because she felt he owed her.
His aunt wanted him to cancel his trip abroad and pay for her college fees instead
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When he said no, she went to such extreme lengths that she now faces time behind bars
He then revealed that it's not the first time she's asked for money for college fees
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A few people felt he should try and help his aunt while others completely disagreed
"Ungrateful brat": his refusal to lend the aunt money caused a vicious family feud
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Some felt his relatives had done him a favor
In a shocking turn of events, the aunt broke into his house while he was away
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"The judge didn't look happy": the aunt finally had her day in court, and it didn't go well
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Lending money to family can be risky, here's how experts suggest you go about it
Lending money to friends or family in need can be a kind gesture. However, it can also cause a lot of problems, especially if they don't pay it back.
If managed correctly, there are times it makes sense for someone to borrow money from a friend or family member instead of a bank. For example, if they're just starting out and don't have enough credit history to qualify for a bank loan. Or if they need money urgently, and can't wait for a financial institution to make its decision.
According to the Consumer Financial Protection Bureau (CFPB), around a fifth of U.S. adults get financial support from relatives or friends, while up to one-third provide support to others. But experts warn that if you're planning to lend money to family, you should always treat it as a formal agreement. And before agreeing on anything, ask yourself whether you have the money to spare, and whether the would-be borrower is likely to pay it back.
"If some distant cousin you barely know comes to you asking for a loan, you'll want to think a lot harder about it than if the would-be borrower is your sibling, child, or parent," say the financial experts at Investopedia.
They add that no matter how close the relative, "if you know that person to be irresponsible with money or to have another serious problem... you may still want to think twice." If you do decide to lend money in that situation, say the experts, be prepared to never see it again.
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Always make sure you're in a position to lend the money and don't deplete your own emergency savings to do so. Also, don't use your own credit to provide a loan to someone else.
"You might consider co-signing a loan application in some limited instances. But if you do, you'll be stuck paying off the loan yourself if the other person can't or won't," say the experts. "In addition, you could wreck your own credit in the process, making it difficult for you to get a personal loan, car loan, home mortgage, or other form of credit in the future."
Investopedia's team advises that you always have a written loan agreement to avoid misunderstandings and ill-feelings. This should include all the terms, like when and how you expect to be paid back, how much you're lending, etc.
"Be as specific as possible, and make sure the borrower knows what's expected of them and what happens if they fail to live up to the agreement," Investopedia's site notes. "If you're planning to charge interest, be sure that is clear, too."
Some suggested she take some online classes in jail to make up for not going to college
