NEW YORK–The student debt crisis that has engulfed many Millennials is “increasingly moving back in time to snare parents,” according to an analysis of new data.
In that analysis, conducted by Kevin Carey, who directs the education policy program at New America and published by The New York Times, it was revealed parents of college students who borrowed through the Parent PLUS student loan program now hold more than $100 billion in debt, a figure that does not include the student debt that may be held by the parents themselves for their own educations.
In all, Americans hold an estimated $1.7-trillion in college debt, a figure that grows larger every year.
Carey noted the U.S. Department of Education’s College Scorecard allows students and parents to look up a college, or a group of colleges, to see how many students take out federal loans and how much they borrow, but it “omits crucial information: How much do parents borrow for their children’s education?”
“Data available this month for the first time on the College Scorecard shows that at some colleges, the answer is: a lot, often much more than students themselves,” Carey stated. “If we think of student and parent debt together as ‘family debt,’ the loan picture at many colleges looks much more dire.”
No Cap
Carey noted the Parent PLUS loans have no cap on the loan amount, and as a result, parent loans are often much larger than student loans. Using data available through the Scorecard, which does not include money borrowed from lenders other than the federal government, Carey reported volume of Parent PLUS loans is growing quickly, from 14% of loans for undergraduates in 2013 to over 25% last year. The data also reveal at which colleges students graduate with the greatest amounts of debt. For instance, at the Savannah College of Art and Design, more than 2,000 parents took out PLUS loans for students who left the university in 2018 and 2019. Nearly half of those students finished without a degree, accruing a median debt for their parents of $42,385. For students who did graduate, the average debt among parents who took out PLUS loans was $91,960, among the highest amounts at any college in the country, Carey reported.
‘Moving Backward’
“The growth of Parent PLUS borrowing means that the student debt crisis that engulfed Millennials is increasingly moving backward in time to snare parents with far fewer working years left to earn money for loan payments,” wrote Carey. “The federal government can and does garnish Social Security checks for older parents who default on Parent PLUS loans.
“And as older Millennials raise children, they may end up taking out new college loans before paying back their own. The College Scorecard data can at least give parents and students a better sense of which institutions will put them at greatest risk.”