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Borrowing From Family? Here’s How It Can Blur Expectations

After eight years of consistently paying her parents $1,000 each month toward the student loans they had taken out for her education, Sarah from Philadelphia believed she was almost entirely debt-free.

Ultimately, the $96,000 in overall payments ought to have accounted for both her starting debt and the accrued interest from these borrowings.

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On a recent episode of

The Ramsey Show

The 29-year-old reveals that she was “stunned” to find out her parents view her debts as part of a single large pool of student loans shared with her brothers and sisters. This means Sarah’s parents believe she should continue covering some of her siblings’ educational loan payments.

According to Dave Ramsey, Sarah’s predicament illustrates how taking loans from relatives can complicate relational dynamics, emphasizing the importance of having an honest discussion to establish clear limits.

The financial support from your parents can be unpredictable.

A 2024 report from the

Bank of America

discovered that 46% of adult Generation Z Americans depended on monetary support from their parents for costs spanning rent to debt payments.

Similar to Sarah, numerous young adults within this group probably depend on

Parent PLUS loans

For student debt, approximately 3.6 million Americans held Parent PLUS loans totaling an aggregated balance of $114.3 billion as of 2025, according to the data.

Federal Student Aid

These loans account for approximately 7.1% of the overall amount.

$1.62 trillion

with student loan debt nationwide.

In short, the “bank of mom and dad” represents a significant source of educational financing in America. Nonetheless, such loans frequently complicate the dynamics between a parent and child as well as those expected in a lending arrangement—particularly when the conditions of the loan aren’t clearly defined or misunderstood, leading to differing expectations from each side.

For Sarah, Ramsey thinks she should be able to repay just her own loan. “You don’t owe anything legally,” he explains to her. “While morally you might feel obliged since you agreed to cover your share, you didn’t commit to paying for your brothers’ or sisters’ parts.”

From Ramsey’s perspective, Sarah is grappling with a relational problem instead of a monetary concern.

Read more:

Looking for an additional $1,300,000 by the time you retire? According to Dave Ramsey, this could be achievable.

This 7-step strategy ‘always succeeds’ for eliminating debt and achieving wealth in America.

—and anyone can achieve this

Sarah’s approach isn’t going to be simple.

To address the problem, Ramsey suggests that Sarah should have a candid discussion with her parents to realign their expectations. Additionally, Ramsey recommends that Sarah consults with a financial advisor to ensure her figures are accurate and verify whether she actually owes any further funds to her parents.

Sarah acknowledges that this discussion about finances will probably be quite “challenging.” Her hesitance is not uncommon—research shows

Empower

Most Americans (63%) acknowledge steering clear of financial talks with relatives. Often, such conversations can put a strain on familial relationships.

” numerous occasions, I have witnessed friendships and marriages become tense and occasionally fall apart due to lending money,” Ramsey mentioned in an excerpt from his program that was uploaded online.

Facebook

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However, these challenging discussions may prove essential when you and your close family members aren’t aligned on a loan that was mutually accepted many years prior.

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The content of this article serves purely informational purposes and should not be interpreted as advisory. No warranties of any sort are provided with this material.