CLEVELAND — According to a new survey compiled by LendingTree, 56% of U.S. parents with children under the age of 18 are saddled with coronavirus related debt, with 40% taking on a significant amount of new credit debt, due to COVID-19 economic impact.
LendingTree personal loan writer Erika Giovanetti told News 5 the survey polling more than 1,000 U.S. families shows 15%, or about 1 in 7, have taken on personal loan debt to make up for coronavirus related losses or expenses.
“A little more than a third, 36% of parents, with young children tapped into their child's college expense funds,” Giovanetti said. "Six in ten parents also had to spend more than $1,000 for their child’s distance learning — iPads, laptops, even office furniture, software for computers.”
“More stimulus money from the government would be essential for families right now," Giovanetti said.
Scott Shane, Professor of Entrepreneurial Studies with Case Western Reserve University told News 5 as parents are forced to take on more debt, the spin-off economic impact is sure to slowdown the COVID-19 economic recovery in the coming months.
“This not going to get paid back anytime soon, and if people end up in a cycle of debt, that could be a real problem,” Shane said. “They won’t be able to pay the credit card bill, those will mount up, then to deal with that, some of the people will have to skip mortgage payments.”
“The government needs to do more, not just the federal government, but state and local governments," Shane said. “It's going to be a slow recovery, I’m worried that that could happen, because what you’ve got is this massive unemployment and people going back slowly to work.”
Professor Bill Kosteas, Economics Chair with Cleveland State University told News 5 an extensive study on the impact of the current stimulus plans needs to be conducted first, to more accurately determine how to best help stressed families before launching any more federal financial assistance.
“You’ve got two kids doing remote learning, you’ve got two parents working from home, that’s putting a lot of strain,” Kosteas said. “Coming into the pandemic, we had a situation where far too few households had money set aside.”
“We’ve never seen contraction of this magnitude, with this speed, Kosteas said. “We need to sit-down and see how effective those tools were in helping out these households, before we sit down and think about what is next.”