The Corner


Students Are Taking on Loads of Debt. So Are Their Parents

People talk about the growing level of student college debt, but that isn’t the whole problem. Parents are also borrowing more and more to finance college through Parent PLUS Loans.

In today’s Martin Center article, Anna Martina looks into the growth of such lending.

Parent Plus loans aren’t new, but have been increasing: back in 1990, only 4 percent of students were also getting such funding; today, it’s 20 percent. Of course, the default rate is rising too.

Martina writes, “Despite their higher interest rates, origination fees, and a growing default rate, parents are still taking out PLUS loans. Like the single mom in Alabama who wanted her daughter to attend college, most take on this debt with the hopes that their children will have successful futures. However, many parents are stuck with debt, and their children don’t earn a degree. Rather than acting as a leg up for families that are struggling, Parent PLUS loans add yet another burden to the young and the old.”

She also points out that some schools sugarcoat PLUS loans, telling parents that they’re “low interest” when in fact the interest on them is almost twice that for student loans.

The parents ensnared by these loans are more apt to have students at lower-ranked schools as well as at HBCUs.

Martina concludes, “The UNC Board of Governors doesn’t have the authority to limit how much students can borrow, but they can make more of an effort to educate students about the riskiness of debt. They could also provide more information about student outcomes and the problems with indebtedness that often accompany Parent PLUS loans. Potential students need to know the risks as well as the possible benefits of attending college. Chasing a college degree shouldn’t mean leaving parents trapped in debt.”

George Leef is the the director of editorial content at the James G. Martin Center for Academic Renewal.


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