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Parents are taking out bigger loans to pay for their children's college education

Dave_BerryDave_Berry CC Admissions Expert Posts: 2,742 Senior Member
"A loan program offered to parents financing their children’s college education has been the target of repeated calls for tighter restrictions on eligibility. And a report released Wednesday by the Brookings institution on Parent PLUS loans adds new fuel to arguments for restricting the program.

The report finds that the average loan amount taken out by parent borrowers has more than tripled in the last quarter century, according to the report. And parents with six figures in loan debt make up a growing share of borrowers entering repayment." ...

https://www.insidehighered.com/news/2018/11/29/report-finds-parents-college-students-taking-out-more-debt-and-repaying-slower-rates
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Replies to: Parents are taking out bigger loans to pay for their children's college education

  • CupCakeMuffinsCupCakeMuffins Registered User Posts: 630 Member
    edited December 5
    This whole system needs a proper re-evaluation and better regulations. First, there should be a cap on college tuition, so called “non-profit & generous” colleges with big endowments keep increasing cost as they please. Responsibility of repayment should be on an individual, not on parents or on college or state.

    Financial aid should treat every young person the same. Give everyone student loans and opportunities to repay, instead of weighing the system down with freebies and making it expensive for everyone else.

    Lowering the cost and making beneficiaries put resources back in the pool is the only way to provide equal opportunity to all.

    If people have to pay back instead of counting on system or parents to pick up the tab then they would take education more seriously. Too much non-sense going on on college campuses.
  • NEPatsGirlNEPatsGirl Registered User Posts: 2,704 Senior Member
    Families trying to keep up with the Jones' because their snowflakes deserve the best. Somehow, the taxpayers will end up eating this for those who didn't care to read the fine print or assess their finances honestly. Since my kids entered the college years I've seen countless, otherwise level-headed, friends take out loans far heftier than they can afford and then are bewildered when after graduation their kid is living at home working for $30K/year. Everyone struggles. But God forbid their child attend the lowly state college or be persuaded to major in a field where they can make a true living.
  • NJWrestlingmomNJWrestlingmom Registered User Posts: 756 Member
    It boggles my mind. Our son didn't apply to anything we knew we couldn't afford. He will come out with just the Federal subsidized and we're able to pay the rest of his in state school.

    My co-worker's kid is insistent she has to get out of state. She wants to be a pre-school teacher. The front runner is currently an out of state public (all her picks are out of state publics) with no merit offer, no college savings, no home equity. I'm not sure how exactly they plan to pay for this, and how a pre-school teacher will cover those payments upon graduation. But they won't make the kid apply to a state school.
  • ProfessorMom1ProfessorMom1 Registered User Posts: 366 Member
    A few friends of mine didn’t think the schools’ aid calculators could possibly be correct. So let kid apply and then couldn’t say no when kid was accepted.
  • Mwfan1921Mwfan1921 Registered User Posts: 630 Member
    It does boggle the mind. I expect many of us have had conversations with family, friends and/or clients who are considering large parent plus or private loans to fund their kids' educations. It is difficult for some people to remove emotion from what should be a rational decision. I don't know the answer to changing current beliefs and patterns....do people need more information/education? There's tons of info re:consequences of borrowing online, as well as loan payment calculators on both government and private sites. Do people not believe the data that show many get good educations (and jobs) from colleges ranked even below the top 100? What is the missing piece(s)? Or are people just responsible for their own financial decisions, whether good or bad?

    I don't foresee colleges reducing prices anytime soon. Until there is real competition, in the form of online degrees or whatever other alternative education/degree programs might gain momentum, colleges will continue with current pricing strategies because those strategies are working (and very successfully). And at first, that competition will result in the closure of small privates and directional state universities who won't be able to attract enrollment numbers necessary to remain viable. The top schools, pick a number, top 500, top 1000, top 1500, will operate with a business as usual mindset for a long time.
  • Leigh22Leigh22 Registered User Posts: 55 Junior Member
    My H puts everything in a spreadsheet- it is just how he is processes everything. He created one with my S for all of the colleges he has on his list. Using the NPC they estimated cost. It includes amount we will pay and then his financial responsibility if the tuition is higher. Obviously the numbers are just estimates, but they included likely beginning salary for his degree, rent and utilities, car payment and how much a month a loan payment would be. It was a great exercise for our S and I believe it will definitely impact his decisions.
  • HeartofDixieHeartofDixie Registered User Posts: 105 Junior Member
    It seems like there might be two groups that are likely to take out huge parent loans. The first would be those who don't want to tell their kids no, or perhaps they are just uninformed, and borrow for a college they can't afford instead of steering them towards a school that is within their budget. The second group would be very low income students for whom any school would be more than their parents could afford. If they have top stats and can get into one of the schools that meet need, or have high enough stats to get top merit scholarships then they can go to school without debt. It gets much trickier for good students who don't have top scores, which is very common if they are coming from lower achieving schools. There are limited options and their parents or other involved adults may not know how to navigate the process.
  • mom2collegekidsmom2collegekids Forum Champion Financial Aid, Forum Champion Alabama Posts: 84,224 Forum Champion
    few friends of mine didn’t think the schools’ aid calculators could possibly be correct. So let kid apply and then couldn’t say no when kid was accepted.


    Yes, that happens.

    More often what happens is this: parents let their kids apply wherever they want with the idea that “in the spring, we’ll put all the offers on the table and see what’s best.” This wrongly assumes that there will be some offers that will work. Oftentimes, NONE of the offers “work”. Too often little or no aid is given. Then, it’s too late, the parents/students don’t want to be embarrassed and do a gap year, so they sign their names to loans and make all the ugliness “go away”...... for the time being.
  • mom2collegekidsmom2collegekids Forum Champion Financial Aid, Forum Champion Alabama Posts: 84,224 Forum Champion
    It is difficult for some people to remove emotion from what should be a rational decision. I don't know the answer to changing current beliefs and patterns....do people need more information/education? There's tons of info re:consequences of borrowing online,


    While with a simple googling exercise, one can easily find stories of students/parents drowning in student loans, there’s still too much denial going around. Until folks personally know people whose lives have been turned upside down by large private loans or Plus loans, too many are not going to change.

    But, since it’s now commonplace for people to borrow a lot of money for college, soon nearly everyone will be exposed to someone drowning in school debt.
  • missbwith2boysmissbwith2boys Registered User Posts: 533 Member
    Yeah I have a coworker that will be in debt to the tune of nearly $450k (his estimate) by the time his three kids finish college.

    Nevermind that at the time two of them graduated from high school they would’ve been eligible for two years of free community college.

    He’ll work until the day he dies.
  • ccprofandmomof2ccprofandmomof2 Registered User Posts: 338 Member
    I know a lot of people who do take on extreme debt because they believe they will eventually inherit enough money to pay it off in one fell swoop. That's a crazy risk, esp. in this age of expensive long-term care. We shall see how it all works out for them...
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