New Research Shows Education Debt is a Growing Hardship for Parent Borrowers

According to new research from The Brookings Institution, parents of U.S. college students are increasingly struggling under the burden of education debt. With few restrictions for borrowing through the federal Parent PLUS Loan program and skyrocketing tuition rates, more families are taking out expensive loans — and defaulting on repayment — to help their children cover the cost of higher education.

The annual amount that parents are borrowing more than tripled in recent years, says Brookings. In 1990, the typical parent borrower took out approximately $5,200 in education loans; by 2014, that amount rose to $16,100. The total amount of education debt accrued by parent borrowers also significantly increased during this timeframe, growing from an average sum of $6,200 to $38,800.

In terms of paying back these loans, the Department of Education does not officially track parent borrower outcomes. However, Brookings estimates that the 5-year default rate for this population rose from 7 percent in 2000 to 11 percent in 2009. Researchers also say that parent borrowers are repaying education loans at a slower pace than in the past. Compounding the problem is the fact that they tend to be ineligible for many of the borrower protections that students receive, such as income-based repayment plans.

Brookings also found that repayment outcomes among vary among type of institution. Parents of students who attend for-profit colleges and universities struggle the most with repayment. Those with children at HBCUs and Minority-Serving Institutions also face significant challenges in repaying what they have borrowed.

The researchers say their findings indicate that offering loans to parents with low credit scores and lifting caps on the amount that can be borrowed under the Parent PLUS Loan program encourages colleges and universities to charge higher tuition and to offer expensive programs that families cannot actually afford. They also caution that continuing this trend could result in even further financial hardship for low- and middle-income families, thus exacerbating economic disparities between those who can afford the steep cost of college and those who must go into debt to afford a degree.