Parent PLUS Loans

Parent PLUS Loans Are A Driving Force Of Debt In Black Families, newsletter 2,

Going to college is a dream come true for both students and their parents. However, the road traveled to get that degree comes with a heavy price tag. Over the years, thousands of Black college students and their guardians have signed for Parent PLUS loans—the start of financial burden, Word in Black reports.

Parent PLUS Loans offer additional funding for higher education, but for families of Black students, the long-term effects are detrimental. These loans account for $111 billion, with over three million borrowers; education analysts acknowledge that people think it’s another means of support.

“Our borrowers and our parents don’t think of it as a trap, they think of it as a means for support,” senior policy analyst at The Education Trust, Brittani Williams, said. “I use that term loosely because loan and support are not synonymous.”

Without these uncapped, high-interest loans, Black Americans would continue to struggle to pay for college due to the cost and insufficient financial aid. Parent PLUS Loans are a type of federal Direct PLUS Loan launched in 1980 through the Higher Education Act. A report from The Education Trust points out how the loans affect Black borrowers and offers recommendations for changes.

Some changes: canceling at least $50,000 of federal student loans per borrower, lowering interest rates, doubling the Pell Grant and creating federal-state partnerships, and making public college debt-free.

Originally intended for middle-class families, those with fewer resources like low-class families are turning to them like Sheila Spence. At first, she looked at the loans as a blessing but after sending her three daughters to college, it became a “double-edged sword.”

“It’s chop-chop. There are 25 people in the line behind you,” Spence said, according to Word in Black. “At that point, at that moment, I’m willing to sign anything. If this will get her into the dorm, we’re going to do it.”

According to Inside Higher Ed, Parent PLUS loans “took up, on average, 25.3 percent of a typical Black family’s income, versus 14.2 percent of a typical White family’s income” during the 2015–16 academic year. Researchers from the Century Foundation found that Black and Latino parents are disproportionately taking out Parent PLUS loans. Almost 20 years after being approved, data show the average borrower will still owe 37 percent of what was borrowed.

But there may be a light at the end of the tunnel. While the country awaits another decision from the Supreme Court on student loan forgiveness, the Biden administration’s plan to forgive up to $20,000 in federal student loans includes Parent PLUS loans borrowers.