The Growing Loan Burden for Parents of College Students

Rachel Fishman was mentioned in Inside Higher Ed discussing Parent Plus loans and the need for a more fundamental reform of the program.

Parent borrowing has often flown under the radar relative to undergraduate student loan debt. There isn’t much good data on borrowers, and the loans make up a sliver of the overall federal student loan portfolio, said Rachel Fishman, deputy director for research at New America’s Education Policy program.

But the loans are instrumental for many students to access colleges, especially historically black institutions. When the Obama administration attempted to tighten eligibility standards on Parent PLUS loans in 2011, it led to loan denials for thousands of families and intense backlash from black colleges. Many of the families who take out the loans don't have other options after their student exhausts their federal financial aid eligibility. They likely won't, for example, qualify for private student loans with better rates.

Although those changes were carried out clumsily, Fishman has written that more fundamental reform of the program is still needed. In a paper earlier this year, she said the program exacerbates the racial wealth gap by saddling many black families with debt they’re unable to repay. The Brookings report only adds to those concerns, she said.

“The PLUS program is the only undergrad loan program where loans have been increasing year over year even as enrollments decline,” she said. “The result, as Looney and Lee point out, is that average loan balances for PLUS have increased dramatically.”

Many institutions package Parent PLUS loans as part of a student’s financial aid award letter, a practice faulted by Fishman and other critics. And even more have come to rely on the loans as a source of revenue.