Student Loan Related

The Parent PLUS Program Drives Down Disadvantaged Parents

Written by Richard Fossey

Our government’s Parent PLUS Program is an insidious scheme to lure low-income parents into taking out student loans so their kids can go to colleges they can’t afford.

Insider Higher Ed’s Kery Murakami tells the story of Ewan Johnson, whose mother owes $150,000 in Parent PLUS loans–money she borrowed so her son could get a degree from Temple University in strategic communications and political science.

As Johnson related, he comes from “a low economic background.” Will his mother will ever pay off her Parent PLUS loans? I doubt it.

Johnson’s mother is one of 3.6 million parents who collectively owe more than $96 billion in Parent PLUS loans. For the most part, parents aren’t taking out these loans so their kids can attend elite private schools like Harvard. “Rather,” as Wall Street Journal reporters Andrea Fuller and Josh Mitchell observed, “they include art schools, historically Black colleges and private colleges where parents are borrowing nearly six-figure amounts to fulfill their children’s college dreams . . ”

Indeed, African American parents are hurt the most by the Parent PLUS Program. The WSJ reported that 20 percent of African American parents who took out Parent PLUS program in 2003-2004 defaulted on their loans by 2015.

Default rates for some colleges are exceptionally high. A New America study found that 30 percent of Parent PLUS borrowers at 15 institutions default within two years!

Should all this debt–nearly $100 billion–be forgiven? President Biden proposes to knock $10,000 off of every federal student loan, but it is unclear with his plan includes people with Parent PLUS loans.

Policymakers worry that forgiving all Parent PLUS debt will unfairly benefit wealthy families who have the resources to pay back their loans. Sandy Baum, a student-loan expert, said that forgiving all Parent PLUS debt would be “outrageous.”

Hardly anyone suggests that we just eliminate this dodgy government boondoggle that exploits low-income and minority families.

READ  How Can I Payoff Massive Parent PLUS Loans My Mom Can't Afford?

So why don’t we just make one straightforward reform?

Let’s allow parents who wrecked their financial futures so their kids could attend the wrong college to discharge their Parent PLUS loans in bankruptcy.




About the author

Richard Fossey

Richard Fossey is a professor at the University of Louisiana in Lafayette, Louisiana. He received his law degree from the University of Texas and his doctorate from Harvard Graduate School of Education. He is editor of Catholic Southwest, A Journal of History and Culture.

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