A new report from the Texas Public Policy Foundation has revealed that parent student loans amount to 30 percent of student loan debt, with parents often borrowing tens of thousands of dollars for their child’s education. Here’s what you need to know.
1 current trend within student loans for the week of Sept. 20, 2021
1. New report highlights the cost of sending children to college with PLUS loans
A report by the Texas Public Policy Foundation shows that parents borrow a median of $23,415 in federal parent PLUS loans for their child’s education, with these loans accounting for roughly 30 percent of student loan debt in the U.S. The data aims to bring awareness to both policymakers and parents about the loans and what reforms can be made on a federal level.
Parent PLUS loans are federal student loans that are offered to parents of dependent undergraduate students. Parents can borrow up to the total cost of their child’s attendance, with fixed interest rates that currently sit at 6.28 percent.
Because parents can borrow up to the total cost of attendance, debt loads can easily climb much higher than the median. In addition to overall borrowing trends, the report lists median parent debt amounts for specific colleges and programs, many of which are over $100,000.
How this affects student loans
Most of the conversation around student loan debt and the rising cost of college centers around students themselves, but the Texas Public Policy Foundation report showcases the extent to which parents are affected. The report states that the data “will help parents make more informed decisions when helping their children choose and pay for college” and “inform policymakers when they reform the parent PLUS program.”
If you’re interested in borrowing PLUS loans to help finance your child’s education, limit your borrowing to only what you need. Parent PLUS interest rates are higher than those of other federal student loans, so borrowing upward of $100,000 for your child’s education could end up being extremely expensive.
Here’s how you can get prepared
Whether you’re new to student loans or well into repayment, it’s wise to stay informed about how your student loan rates could change. As 2021 continues, more opportunities for cheaper loans or loan forgiveness could open up; keep an eye on the Bankrate student loans news hub for the latest trends.