Due to the all-time high expenses associated with modern college education, it is natural for many parents of students to choose to bear the brunt of the financial burden in order to give their children an easier, less debt-ridden start to the professional sphere. However, this loving sacrifice is increasingly at the cost of the parents’ financial well-being. According to recent studies and developments in default rates among borrowers of the Parents Plus loan program, these loan recipients are having an increasingly difficult time repaying this sort of student loan, often to hugely detrimental effects. While the intentions behind the formulation and acceptance of the Parents Plus student loan program are undoubtedly in good-faith, the requirements are strict, and the penalties for falling behind on repayments are unforgiving. 

To qualify for Parents Plus – unlike applying for other federal loans – requires a credit check before it is given, and in comparison, the Parent Plus loans have higher fees and interest rates, presumably because the borrowers are already financially independent individuals. However, there is no maximum amount that can be borrowed, besides the cost of attendance at a given college minus other forms of financial aid already received. In the past twenty-five years, balances owed by parents have more than tripled. The collective amount in student loan debt which this segment represents is $87 billion. One in eleven parent borrowers owe more than $100,000. Default rates have sharply inclined. 

Herein lies the absurdity. The rationale behind these loans is to ease the financial stress of the third-party, the student benefitting from the sum awarded; a credit check is in order, to verify the parent borrower’s history of repaying debts; then, a hefty loan is awarded; there are fewer repayment options for this loan, and these options more severe – oftentimes as much as twenty-percent of the parent’s monthly income; the consequences of not complying with the repayment terms can include ruined credit or reduced wages. 

So, to summarize, in an attempt to save the student from financial hazard, loans are offered to their parents, dependent on a credit check. If their credit is acceptable, which it usually turns out to be, then the size of the loan can be as great as the student, and their chosen college in this situation, requires. The tremendous toll of this lump sum can weigh down the parent borrower so much as to result in the annihilation of their previously ‘acceptable’ credit, and general financial ruin – or, what they were trying to spare their child of in the first place. 

The worst rates of repayment of the Parents Plus loan program are among those parents that send their children to private colleges – as these institutions tend to have higher fees on virtually every front compared to public universities – and universities traditionally attended by underrepresented minority students, such as historically black colleges and Hispanic-serving institutions. These loans, intended to lessen financial stress, are actually wreaking a staggering amount of havoc on those whom they are aimed to benefit most: families trying to send their kids to college.

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