Parent Plus Loans Are a National Disgrace

President Biden is flirting with a massive student-loan forgiveness plan–$10,000 in debt relief for 97 percent of all college borrowers.

The Washington Post, perhaps America’s most progressive newspaper, urges him not to pull the trigger.

“Biden could ease the burden on the genuinely disadvantaged in a number of more targeted ways,” the WP editorial board advised, “and avoid setting a precedent for broad forgiveness of loans that future presidents will be pressured to match.”

I think Biden will honor his campaign promise and forgive $10,000 in student debt for millions of borrowers. Is that a good idea?

I don’t think so. As the WP pointed out, this plan would cost almost a quarter of a trillion dollars, and 71 percent of the benefits would go to the top half of the income scale.

Instead, why doesn’t the Biden administration focus on debt relief for the most overburdened student debtors and their parents?

According to the Century Foundation, which recently published a report on the Parent Plus program, 3.7 million parents collectively owe $104 billion–money that parents borrowed to help pay their children’s college expenses.

This is what the Century Foundation found:

  • The median Parent Plus debt is $29,600.
  • Thousands of retired or disabled parents have had their Social Security benefits reduced because they defaulted on their Parent Plus loans.
  • Black and Hispanic parents take out proportionately more Parent Plus loans than White parents.
  • The use of Parent Plus use is greatest at HBCUs, where most students are African American.
  • At 59 HBCUs, no more than ten percent of Parent Plus borrowers made significant progress in paying off their loans after ten years.
  • And here is a shocking statistic: “At some large for-profit colleges, Parent Plus makes up the majority of all financial aid received by undergraduates.”

If progressive political leaders want to do something significant to address the hardships created by the federal student loan program, they should do these three things:

  1. Stop withholding Social Security benefits to elderly and disabled student borrowers and Parent Plus borrowers, something Senator Elizabeth Warren proposed several years ago.
  2. Eliminate the “undue hardship” rule in the Bankruptcy Code and allow distressed student and parent borrowers to discharge their student-loan debt in bankruptcy like any other nonsecured debt.
  3. Abolish the Parent Plus Program altogether.
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It is unclear whether Biden’s $10,000 debt-relief proposal will benefit Parent Plus borrowers. I hope so.

Nevertheless, even if parents are included in Biden’s proposal, $10,000 in debt forgiveness won’ be enough to alleviate their suffering. What distressed Parent Plus borrowers really need is bankruptcy relief.

Unfortunately, bankruptcy relief is not in the political cards.

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.

1 thought on “Parent Plus Loans Are a National Disgrace”

  1. I could not agree more with the author. I see this problem every day. If there is going to be relief for student loan debt it needs to be directed to the poor. The problem for lower-income and poor parents could be solved if parents obligated on a parent plus loan could qualify for income-based repayment plan like regular student loan borrowers. Right now they can’t. They have no means of stopping an offset of Social Security even if they are lower-income or impoverished. The result is that a parent receiving Social Security of $1000 per month who signed for a now defaulted parent plus loan can have their already meager SS lowered to $850- a disaster. SS being offset by a 15% for already poor seniors results in inability to purchase medicine, adequate food, utilities, housing etc. leading to dramatic societal costs caring for sick and homeless elderly. If you are going to throw money at the problem throw it where it’s needed- a process for relief for those in need- poor elderly. Eric HELPS Nonprofit Law Firm


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