Watch what students have to say about borrowing money from friends.

Caroline Goddard knows the downside of loaning money to friends. Her friend let a cousin borrow $100 and never saw it again.

“It’s just – like, she used to hang out with us sometimes,” said Goddard, freshman theatre studies major, “but now it’s just awkward.”

Loaning money to friends often includes conflict because of neglected details in the initial agreement, said Karen Cunningham, assistant political science professor.

Cunningham said the pitfalls of friendly borrowing lie in the false expectations and assumed terms of agreement for both parties.

“There are a lot of variables involved in deciding whether to loan money to a friend,” Cunningham said.

She listed some:

• How reliable is the friend?

• What is the amount of money being borrowed?

• Can you afford to loan the money?

• How long until you might get the money back?

• Can you part with the money if the person doesn’t pay you back?

Remah Dohel, sophomore fashion merchandising major, said the friends reliability strongly influences her decision to loan money.

“If my best friend I’ve known for years asked for, say, $1,000, I would give it to him because I know he would give it back to me; he would return the money,” Dohel said. “But if I give it to a friend I’ve only known for a month, if he asked for a $1,000, I wouldn’t give it to him at all.”

DeMario Hughes, sophomore fashion merchandising major, said he thinks lending money to friends is a double-edged sword.

“I think you should be able to loan money to friends because that’s the reason you’re friends,” Hughes said. “You’re supposed to help each other out.”

Cunningham said people sometimes would loan friends money even though they can’t afford it because they feel obligated to help a friend in need.

Venu Remani, doctoral student in strategic management, said his friends came to his aid when he needed them.

“Whenever I was in need of money, my friends helped me out,” Remani said. “That increased the friendship among us; that increased the trust among us.”

Junior accounting major Alascia Jones said if a person decides to loan money, both people should know what is expected of each other.

“I think you need to have a clear understanding before you lend the money if you’re going to lend to friends,” Jones said.

Cunningham also said the lender’s and borrower’s expectations need to be addressed.

“They should lay out what expectations are so both people are on the same page,” she said.

Cunningham said the expectations from the borrower’s side might be an assumed time of repayment or a payment of the loan back with interest because of their good gesture.

In the same respect, the lender might assume the friend should give a loan just because they’re friends or that they have as much time as they want to pay it back.

“When the lender thinks, ‘Oh, I’ll get the money back soon,’ and the borrower thinks, ‘I’ll pay it back whenever,’ there becomes a conflict,” she said.

Cunningham said an additional and important thing to consider is the worst-case scenario: What if they don’t pay me back?

She said they should discuss this along with expectations and have a plan on what will happen if something goes wrong.

Cunningham said a possible solution to a botched agreement or to avoiding the loan altogether could be to trade favors.

She gave an example: I will give you $20 for the week if you give me your Beatles CD to put on my iPod, or I’ll give you money for gas, but you have to take me somewhere.

Junior marketing major Zak Martin said he thinks loaning money to friends is just bad news.

“It’s not a good deal to mix business with friendship because it never works out,” Martin said.

Contact student finance reporter Anthony Holloway at [email protected].