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adoption loans

Adoption Loans: When Starting a Family Has an Upfront Cost

When Natalie Brenner and her husband Loren announced to their family and friends that they were going to adopt a baby, they figured they would have several months to financially prepare.

They were wrong.

Just three months after the Portland, Oregon couple finished their home study (a training and background check) they got a call from their agency that they had been matched with a baby boy who had been born the day before. They met Sage when he was two days old, and fell in love.

“We had a fast match,” Brenner said. “We were thinking we would be matched with an expectant mother, not a mom who had already delivered her baby.”

The Brenners—Loren works in a pediatric mental health facility and is getting a graduate degree in teaching, Natalie is a stay at home mom with a side writing and photography business—had started fundraising their adoption from the start. They held garage sales, T-shirt sales, “selling-all-of-our-things sales,” she said.

Their agency required that the fees be paid in full at the time of a match, so the couple had to move fast when they learned Sage was waiting for them.

“Our adoption consultant had given us a list of banks that do adoption specific loans,” she said. But with the couple having little credit history, they were turned down until his parents agreed to co-sign a loan for about 65% of the total cost of the adoption.

adoption loans
New mother Natalie Brenner and her adopted son, Sage.

Adoption Loans vs. Retirement Savings

With domestic adoptions costing between $20,000 to $40,000 or higher and intercountry adoptions costing upwards of $50,000, adoption or personal loans are a critical financial planning tool that many families use.

“People are pretty creative and it’s dependent on their own resources and access,” said Megan Lestino, vice president of public policy and education for the National Council for Adoption.

She’s seen prospective adoptive parents refinance their mortgages or dip into their retirement funds. But a loan, she said, is often the fastest way to finance an adoption when you don’t have the funds in your bank account.

“When there’s already a child in the picture you don’t want to wait, you don’t want to leave the child waiting. On the flip side of that, parents who faced infertility have sometimes already gone through long processes, grieved, waited, done a lot of medical time, and parents don’t necessarily want to parent in their older years,” she said.

“So a loan is really helpful in moving children into families at times that the parents feel like is the best fit for their family.”

There are no hard numbers on how many parents use adoption loans to finance their journey, but there are also no hard numbers on how many children are adopted each year.

There were 50,644 children adopted from a state child welfare agency in the 2014 fiscal year and 5,647 adopted internationally in the 2015 fiscal year, according to the most recent numbers reported by state agencies and the U.S. Department of State.

But that doesn’t take into account the thousands of children adopted each year through private agencies and lawyers.

Lestino points out that a family’s finances aren’t considered a hard red line when granting approval to adopt. Nor does a loan mean they aren’t financially stable parents.

“Even families who are more well off will choose to take out a loan instead because it’s a more affordable way than accessing retirement funds,” she said. “Or because they do have the money but they don’t want to access it because they know there might be extra expenses with another child coming into their family.”

Planning a New Family Budget

Other prospective parents, she said, plan to transition from two incomes to one, if they anticipate their child having special needs. Other prospective parents are single and don’t have the benefit of a two-income home.

Adoptions can also have dozens of hidden costs that can affect the final total. For domestic adoptions, most states allow prospective parents to pay for the birth mother’s housing, utilities, food, and medical care. There may be advertising costs and travel expenses. Location also plays a big role—adoptions in New York City, for example, can be far more expensive than those in upstate New York.

For international adoptions, prospective families have to pay for significant travel back and forth to the child’s home country along with legal processing fees from both countries.

“People take out loans for everything. Most people haven’t paid off their house, that doesn’t mean they don’t deserve to live in one. A lot of people haven’t paid off their car yet, but they need that to get to work,” Lestino said. “Kids need family and the huge cost that comes at the beginning isn’t necessarily something that should burden the child. It really has nothing to do with the child’s needs.”

Brenner couldn’t agree more.

“There’s no way that we will probably ever have tens of thousands of dollars at once. My husband’s going to be a teacher and I desire to be at home with my kids,” Brenner said. “But we love big.”

Their journey to find Sage came with another big surprise—a baby brother born just five months after Sage.

Sage is now 13 months. His brother, Ira, is 8 months. Sage happily plays in the bath and toddles around the house. He loves food – anything and everything, Brenner said, and is starting to talk with “Mama” and “Dada.”

Just before his first birthday, the Brenners paid off their loan after a year of intense fundraising and saving all the proceeds from her side photography business.

The kids, Brenner said, are their everything.

“If we didn’t have that loan, I don’t know what would have happened,” she said. “I would say that we wouldn’t have Sage, but I can’t even imagine saying that so I don’t want to say it.”

Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.