Good mornin’, wealth builders!
I have an absolute DOOZY of a topic for discussion today. This is based on a situation someone I know is dealing with currently…
Would you cosign a loan for your best friend so she can freeze her eggs?
Now before you say “Hell no!” like I yelled immediately when I heard the question, listen to the full story first…
OK, here is the situation. Picture this…
Your best friend calls you up one day asking for your help… She is 41 years old, super smart, has a great job, but hasn’t been a great money saver in life.
More than anything in the world, your friend wants to have a baby. But she hasn’t met the right partner in life yet and is worried that her chances of getting pregnant naturally are shrinking as she gets older.
So, she wants to have elective surgery to freeze her eggs, which costs about $30k.
As of now, she has about $10k from savings and from her parents chipping in money, but she needs to borrow the additional $20k to have the surgery and whatnot paid for.
There are a few loan options available for the $20k… The first is just a personal loan from a bank, with interest rates around 7+%.
But, even better, there’s a non-profit organization she found that will loan her $20k *interest free* on a 4-year term. This specific nonprofit was set up to help people with these types of charitable situations, so the $20k would be interest free and repayments would be $416 per month for 48 months.
There is one problem though… This nonprofit does not take collateral for their loans. They REQUIRE someone else to cosign for every loan. That’s the only way your friend can get the money interest free.
So, your friend is asking YOU to cosign for the $20k loan – so it will be interest free.
Other relevant information
- The reason she can’t have her parents cosign is because they don’t have a strong relationship, and she was brought up to never discuss money with family.
- If she goes through with surgery, there is still no guarantee that it will result in a successful pregnancy later in life. Not to mention meeting the right partner and beginning a family.
- Freezing eggs not only has an upfront cost for surgery, there’s also an ongoing fee for safe storage (about $1000 per year).
- Her car is paid off, and she has no other personal debts. From what I understand about her annual income/expenses, $500 per month payments is completely doable.
- Did I mention this is your BEST friend? Like, as in, you grew up with her together and she means more to you than anyone else in the world. Deep down inside, you trust her.
Soooo… Given all this information, would you cosign for the $20k loan?
I look forward to hearing all your opinions and whatnot in the comments below. Here is what is going through my head…
Reasons to not cosign a loan for your best friend
My default answer to cosigning a loan would be NO! Here are a few reasons why…
- She might default! Obviously, if my friend doesn’t make payments, I’d be on the hook for paying the $20k! (or monthly payments of $416 for however long the loan has left). The fact that she’s over 40 and can’t scratch together $30k concerns me.
- Potentially ruin the friendship: Whether it works out or not, things can get weird cosigning or lending money to friends.
- Future expenses: Let’s say 2 years from now she actually wants to have the baby… If she can’t afford $20k now, how is she going to afford future surgeries, baby delivery, and upfront child costs later? A favor now could be a slippery slope for giving more money later.
- It’s just outside of my comfort zone. I’ve done well in life by following a specific set of money principles. Cosigning loans is NOT one of them and is not great financial advice.
Reasons to say YES
Before shutting my friend down completely, let’s look at the opposite side of things…
- The gift of a baby! Maybe my emotions are running high because my wife and I are exploring the idea of children ourselves right now… Personally, I would love nothing more than to help a friend have a kid, in whatever manner they feel is best for them. Family in life is more important than money.
- I’m financially stable: Although $20k is a shitload of money, losing it wouldn’t break me. What’s the point of accumulating all this money if I can’t use it to help family and friends?
- It might cost me nothing. If my friend makes all payments on time, this situation would cost me zero.
- If I say no, she’ll do it somehow anyway: She’s probably going to get a loan regardless, so I want her to get the interest free one as it’ll be cheaper for her.
Meet-in-the middle options
Now that I’m thinking about this more, here are a few other out of the box ideas…
One idea could be to ask my friend for collateral somehow. I could cosign the loan, but if she could give me something of value then I have some security. For example, she could write a promissory note for her car. Not sure how that would hold up if things got ugly, but just the fact that I have some leverage might incentivize her more to make all the payments.
Another idea would be to tell my friend to get a $20k personal loan from the bank… But, as a gift, I could cover all of the interest payments. If she was charged 7% over a 4 year term, interest would total about $3k. She would end up with a $20k “interest free” loan and I would pay $3k to help a friend. That’s not a bad idea. I’d give $3k to my best friend.
Maybe I could encourage her to wait 1-2 years and try helping her save up the money in cash? (She’d be 43 at that point, and I know age can be an issue).
All in all, I’m not 100% opposed to the idea. But I still think at this stage in my life, I would still probably say no. As sad as it is… I just wouldn’t feel comfortable.
What about you? Tell me what you’d do in this situation…
Happy Friday,
Joel
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I like that bank loan / covering the interest idea! Super creative! And love that you’re always trying to help people out regardless of the decision you end up making…
Look, she has to accept that she can’t find someone to father er child. Not only is this expensive, in-vitro fertilization is amazingly more money. If you sign on to this, I am certain that she would “obligate” you to pay for that as well! She has passed this option for 40 years! Now, nature urges her to fin away. I would say that she has passed this option fr far too long and it ks not just freezing her eggs that will cost $20K. I have seen in-vitro fertilization extraordinarily much more than $20K. I would definitely say no in a rational way as in-vitro can cost more than $20K. You will invest in a sink-hole of more expenses. Say, “I am sorry, but I can’t as the expenses are far greater than $20K. and, no matter what I do, it will lead to even greater expense and this would be unfair for you as well as for me. You are my best friend and will always be my best friend. Wait and adopt s this would cost less than overall expenses.” Give her a hug and see what happens!
I have to say because I’m the biggest cheerleader of adoption…it’s hard for me to cheer other options on if women can’t conceive. There are 15,000,000 orphans…pick one! Foster care? I would give money to someone/a couple instantly if they needed money for adoption.
What if she needs to find a surrogate to carry her baby? That’s another $30,000!
This is a big no for me.
I like the bank loan idea as well. My grandfather always told us that “loaning money to a loved one is a great way to lose money and a loved one” and as far as I’m concerned, cosigning a loan is the same as loaning the money yourself, you just didn’t see it leave your bank account – unless the friend defaults.
Personally, Its against my principles to cosign for anyone, just as I wouldn’t ever let anyone cosign for me. Those principles have led to some level of success in my life. If I’m going to violate my principles, then why even have them?
Loan? No, that’s a terrible idea. If she is 41 and can’t scrape up $20K at that age, then the chances of her repaying the loan are very low. Plus there are a lot of future costs to be able to use the frozen eggs she will also not be able to afford. And the success rate for pregnancy using this technique is only 18%. If for some reason you believe in this misadventure enough to fund it then just give her the $20K as a gift. But under no circumstance should you ever cosign a loan.
As my best friend, I would remind her that eggs from this late in life have a higher risk of problems after birth; could she handle having a special needs teenager at the age of 60? Special needs covers a wide variety of illness and other needs. In addition, the risk of such a late pregnancy could kill her and possibly leave this child an orphan. I’d also ask her about the costs of child care. Is she up for hte thousands of dollars a year professional child care would cost while she works?
I second Angie above; she should foster and adopt, and look for older children, the ones thaat passed over because they aren’t cute babies. Late 40s can a bit hard to be running after toddlers when you cannot give them back to their parents.
This is a best friend so if they were in a jam, I’d just give them the $20k….even $30k. But I would just gift it….no loans, no co-signing. But here’s the key, she isn’t in a jam. She just doesn’t want to pay the interest. She can get the loan from the bank so she should go that route. I would even be willing to say to my best friend’s face: “If you were in a jam, I’d be first in line to help. But you’re not in a jam. Pay the interest.”
I wouldn’t do it, not because I don’t have it, or don’t want to. Money changes relationships with people, so I never lend to friends or family, ever. When my husband was alive he was always bailing his son out with “loans” that of course, never got paid back. One day I finally said, if you can’t let it go, then don’t give it.
Now I know this is a different scenario, but the reason Judge Judy has so much material and makes so much money is because of family and friend “loans.”
If you value your friendship more than anything, don’t do it. Instead, if you have the money, give her a few thousand as a “gift” towards the loan instead. Let her figure it out, plus there is always adoption.
I wouldn’t.
All the negative reasons you’ve listed far outweigh the positive reasons. “The gift of a baby” is a fallacy because they could have the baby, even without an interest-free co-signment.
Likewise, I would feel extremely uncomfortable cosigning with someone who, you said yourself:
” She is 41 years old, super smart, has a great job, but hasn’t been a great money saver in life”
And even moreso, I’d feel very uncomfortable helping her deliver a child into a world if she is unable to save money. Not in like a ‘judgy’ way, but that baby’s gonna have a pretty terrible life if their parents aren’t financially responsible enough to rack up enough money where 20k won’t be a huge dent in their net worth.
Like sure, you’ll feel great helping her because you’re doing *her* a favor, but you’re not doing the kid any favors.
No, the odds of a successful pregnancy from this are not in her favor, it’s just most likely too late already. She needs to try an IUI with donor sperm RIGHt NOW and not keep waiting for a partner. Single motherhood is her best option of having a baby and it needs to be soon. I would gift her money to get donor sperm and an IUI as it would be much cheaper.
Super interesting. As a woman who did freeze her eggs, I know a lot about the process and would never have considered it at 41, the chances of healthy eggs being frozen in a large enough quantity to be viable for IVF is slim – I did it at 35 and the odds were already declining. So from the success perspective, this investment is not likely to pay off her her, and totally agree with the fostering or adoption route, there are so many kids in need of loving parents.
Also – I live in Chicago and 0 options cost anywhere near $30k for a cycle, maybe 2+ cycles with meds and no insurance coverage? Anyways, whatever it costs, if she can’t afford this on her own, how do you afford IVF and then raising a child? She would still be paying this loan off for years and that money would be better spent on raising a foster or adopted child.
I do agree that if someone were to offer to help financially in this scenario it should be seen as a very generous gift.
Unless you are willing to outright give her the money she needs I would not mix money & friendship
30k for egg freezing is incredibly pricey! My friend did it for 15k a couple of months ago. Shop around first, she may be nearly there on her own financially.
I think this is a solid “no” because it does not sound like she is in a good financial spot, and her egg quality at this point is very low, and her pregnancy could result in problems that could leave her unable to work for a while. That being said, she sounds determined so your best bet would be to cover the bank interest as a gift if you can’t say no to her. Really her best option is donor sperm and insemination (ASAP) like others have said, and not waste her money on the egg freezing. It’s just biological facts that childbearing is a young woman’s game!
Would be interested in a follow up on this in future;)
She is very optimistic to consider this option, if she is already 41 with no partner in sight.
However, this hits close to home. At 33, I decided to give fostering a try. Certification was easy, though the actual fostering was a nightmare for me. I gave up the adoption hope that I’ve always had because private adoptions are at least as expensive as buying a new car. So, I did the crazy. I started asking around to find a sperm donor at 36 so I could do this thing on my own. I was quite amazed at how many men said no, but because they would want to be involved and I didn’t want involvement. Sperm banks require quite a bit of money, depending on how many attempts you make. I was hoping to find someone that I could have access to for medical questions or whatever, if needed in the future. It worked out well, I’m currently 41 and have a perfect for me 4 year old daughter.
This option can be amazingly cheap if she can find someone she knows to donate… and she can do the actual insemination herself. I did it with my doctor cheering me on… after doing a double take when I told him what I was up to.
Tell her not to lose hope, but consider more options than egg freezing.