Parents Need to Stop Taking Out Loans So Their Kids Can Attend a Pricey School

Baylor University, a Baptist institution located in Waco, Texas, is a well-respected school. Over the years, it has risen steadily in the college ratings and now ranks among the top 100 American universities.

But Baylor is expensive–tuition and fees are about $50,000 a year. Low-income students can take out federal loans, but these loans are capped and do not cover the total cost of going to Baylor.

So–according to the Wall Street Journal–Baylor has encouraged low-income families to take out Parent Plus loans. In fact, almost half the families that take out these loans are poor.

From Baylor’s perspective, the Parent Plus program is a money tree. There is no cap on these loans, and Baylor gets its money upfront. If parents can’t pay off these loans, that’s their problem.

As the Wall Street Journal revealed, many Baylor parents aren’t paying back their Parent Plus loans. Only 28 percent paid down any of their loans after two years in repayment. In 2018 and 2019, Baylor parents collectively owed 74 percent of what they borrowed ten years after beginning repayment.

Baylor says it does not pressure families to take out Parent Plus loans. In a written statement, a Baylor spokesman said, “We have never strong-armed students to [make] a decision for/against Baylor, as we respect the significance of making a college choice.” What the hell does that mean?

Linda Livingstone, Baylor’s president, admits that Parent Plus loans are a problem. “My heart goes out to families that are in that situation,” she said. “We are working very, very hard to ensure that we don’t see that so much going forward.”

I’m not knocking Baylor. It’s a fine school. But the fact remains that Baylor and many other universities are relying more and more on Parent Plus loans for their revenue.

These loans bear a relatively high-interest rate–6.28 percent, and they can be pretty large. Parents of 2018 and 2019 Baylor graduates borrowed a median amount of $59,000. The Wall Street Journal reported that a school bus driver took out $57,000 in Parent Plus loans so her daughter could attend Baylor.

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Low-income parents jeopardize their own financial security when they take out Parent Plus loans to finance their children’s college education. And Parent Plus loans, like student loans their children take out, are almost impossible to discharge in bankruptcy.

That’s not right. Congress should shut down the Parent Plus program.

2 thoughts on “Parents Need to Stop Taking Out Loans So Their Kids Can Attend a Pricey School”

  1. Congress should remove the bankruptcy exception for private loans first. Then, when credit is restrictive so that even the middle class can’t get loans, watch college costs drop. Plus loans aren’t the issue. They have payments based on income. Private loans are the real horror.

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