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ERIC Number: EJ990508
Record Type: Journal
Publication Date: 2012-Oct-4
Pages: N/A
Abstractor: ERIC
ISBN: N/A
ISSN: ISSN-0009-5982
The Parent Loan Trap
Wang, Marian; Supiano, Beckie; Fuller, Andrea
Chronicle of Higher Education, Oct 2012
As the cost of college has spiraled ever upward and median family income has fallen, the loan program, called Parent PLUS, has become indispensable for increasing numbers of parents desperate to make their children's college plans work. Last year the government disbursed $10.6-billion in Parent PLUS loans to just under a million families. Even adjusted for inflation, that's $6.3-billion more than it disbursed back in 2000, and to nearly twice as many borrowers. A joint examination by ProPublica and The Chronicle of Higher Education has found that PLUS loans can sometimes hurt the very families they are intended to help: The loans are both remarkably easy to get and nearly impossible to get out from under for families who've overreached. When a parent applies for a PLUS loan, the government checks credit history, but it doesn't assess whether the borrower has the ability to repay the loan. It doesn't check income. It doesn't check employment status. It doesn't check how much other debt--like a mortgage or other student loans--the borrower is already on the hook for. Much attention has been focused on students burdened with loans through their lives. The recent growth in the PLUS program highlights another way the societal burden of paying for college has shifted to families. It means some parents are now saddled with children's college debt even as they approach retirement. Unlike other federal student loans, PLUS loans don't have a cap on borrowing. Parents can take out as much as they need to cover the gap between other financial aid and the full cost of attendance. Colleges, eager to raise enrollment and help families find financing, often steer parents toward the loans, recommending that they take out thousands of dollars with no consideration as to whether they can afford it. When it comes to paying the money back, the government takes a hard line. PLUS loans, like all student loans, are all-but-impossible to discharge in bankruptcy. If a borrower is in default, the government can seize tax refunds and garnish wages or Social Security. What is more, repayment options are actually more limited for Parent PLUS borrowers compared with other federal loans. Struggling borrowers can put their loans in deferment or forbearance, but except under certain conditions Parent PLUS loans aren't eligible for either of the two main income-based repayment programs to help borrowers with federal loans get more-affordable monthly payments.
Chronicle of Higher Education. 1255 23rd Street NW Suite 700, Washington, DC 20037. Tel: 800-728-2803; Tel: 202-466-1000; Fax: 202-452-1033; e-mail: circulation@chronicle.com; Web site: http://chronicle.com
Publication Type: Journal Articles; Reports - Descriptive
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A
IES Cited: ED555652