As Adoption Fees Mount, a Loan Could Fill the Gap

Personal Finance
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adoption child loans

Adopting a child is a joyful event, but when it comes to covering adoption costs — which can exceed $40,000 — deciding whether to apply for a loan can be stressful.

“I would say, prepare for anything,” says TJ Clayton of Chattanooga, Tennessee. He and his wife, Victoria, recently adopted their baby son, Max. Much to their surprise, the process ended up taking only a few months, rather than years, leaving them with less time to save. They ended up getting a loan to cover the remaining adoption costs, though it wasn’t part of the original plan.

“Adoption loans are fairly common,” says Megan Lestino, the director of public policy and education at the National Council for Adoption. Generally, she said, people finance their adoptions in several ways, including grants, workplace benefits, fundraising and loans. She added that she couldn’t comment specifically on how many families take out these loans because of the lack of data on the subject.

Whether getting a loan to finance your adoption is the right decision for you might depend on how many twists and turns there are in your own adoption journey. Before applying, consider these things first:

What are your expenses?

First, add up all your costs, including what you expect to pay for court fees, physicals, the home study and the birth mother’s expenses. If you’re adopting through an agency, your costs will likely be adjusted based on your income and you probably will be asked to pay in installments, not all at once. Once you know how much money you need, you can start budgeting.

What grants and benefits can you qualify for?

In 2015, you’ll also be able to claim an adoption tax credit of up to $13,400, which could make it easier to pay back loans later if you do end up borrowing money. Because this credit is non-refundable, you can use it to decrease your tax liability and roll over the extra credit to next year, but you can’t get a check for the difference.

Several nonprofit organizations, such as HelpUsAdopt.org, the Gift of Adoption Fund and the National Adoption Foundation, offer grants to prospective adoptive parents who have completed a home study.



If you’re a member of the military, you can also claim a $2,000 benefit per child after the adoption is finalized through a qualifying adoption agency. Many private companies have generous adoption benefits, as well. Not sure if your workplace has one? Ask your human resources team.

Can you raise money?

The more money you raise, the less money you’ll have to borrow later. Consider doing a simple fundraiser, like selling T-shirts through Café Press or starting a profile on a crowdfunding site, like Indiegogo, to defray the costs. If you belong to a religious organization, ask other members for support.

Can you borrow money interest-free?

If you’ve already completed your home study, you might be able to qualify for an interest-free loan for as much as $12,000 from a nonprofit, which could trim adoption costs further. Applying for one of the best 0% credit cards could also help you avoid interest on your adoption payments for up to 18 months.

Don’t make the mistake of tapping into your retirement accounts early. You might end up paying additional taxes and a 10% fine for withdrawing early, which could cause some serious damage to your finances down the road.

Do you still have expenses to cover?

If you’ve saved, raised funds and qualified for as many benefits as possible and still need more money to finance the adoption, applying for a personal loan could be your best option.

Start by comparing rates at banks and credit unions as well as peer-to-peer lenders and find a loan that works best for you. Avoid borrowing too much. The faster you can pay your loan off, the less you’ll spend on interest.

What really matters

If you only borrow the money you absolutely need for your adoption, you’ll be able to focus more on what’s really important: welcoming your newest family member. For Clayton, the first few days were unforgettable.

“Bringing him home and knowing that this was it was probably one of the best feelings ever,” he says, remembering the night he and his wife tucked their baby into his own crib for the very first time.


Image via iStock.