The parent loan trap
Today, a dozen years on, Ms. Nemenzo’s debt not only remains, it’s also nearly doubled, with fees and interest, to $33,000. Though Ms. Almendral is repaying the loans herself, her mother continues to pay the price for loans she couldn’t afford: Falling into delinquency on the loans had damaged her credit, making her ineligible to borrow more when it came time for Ms. Almendral’s sister to go to college.
Ms. Nemenzo is not alone. As the cost of college has spiraled ever upward and median family income has fallen, the loan program, called Parent PLUS, has become indispensable for increasing numbers of parents desperate to make their children’s college plans work. Last year the government disbursed $10.6-billion in Parent PLUS loans to just under a million families. Even adjusted for inflation, that’s $6.3-billion more than it disbursed back in 2000, and to nearly twice as many borrowers.
A joint examination by ProPublica and The Chronicle of Higher Education has found that PLUS loans can sometimes hurt the very families they are intended to help: The loans are both remarkably easy to get and nearly impossible to get out from under for families who’ve overreached.
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UUUUGGGHHH
I had to take out PLUS loans last year and this year for my son. Hoping to sell my house next year to pay them off and then pay cash for the rest of his college. They are expensive. If you have good credit it is much cheaper to take out home equity loans or lines of credit to pay for college. Unfortunately, my credit sucks after two years of unemployment, maxed credit cards, and missed mortgage payments.
rockmom on October 5, 2012 at 4:07 PM
Your son should enlist or go into an ROTC program at his school. 4 years later he’s out and degree is paid for rockmom.
Youngs98 on October 5, 2012 at 4:14 PM
Wait…you mean I could have got my parents to get loans for my college and grad school tuition instead of taking care of it myself (like I did)?
Dang. Another opportunity lost.
(And my kids paid for the vast majority of their college/grad school as well, no PLUS loans for them either)
Bob's Kid on October 5, 2012 at 4:23 PM
Bubbles, bubbles everywhere.
DFCtomm on October 5, 2012 at 4:24 PM
Here is what is different from when the Baby Boomers went to school. Middle class students often got merit scholarships to attend college. They had good SAT scores, the SAT’s were considered “fair” at the time, and they had good grades in school. You remember, your friend the valedictorian, she had opportunities.
Today, the federal government encourages admittance to college on the basis of need, not grades or merit, and the colleges are forced by the federal government and accreditation programs to filling the financial need of Pell grant students, even those with lower scores and lower grades, and discouraged from offering merit scholarships, which are called Unfair.
Middle class parents are the ones that are burdened with the full cost of tuition on PLus Loans. And the full cost of college is different from when baby boom parents went to school. Today’s college admissions office is told how many full paying parents it takes to break even, and afford the scholarships they have to offer to the Pell grant students they are obligated to take. The middle class parents have to cover the cost of their own student, and someone else’s, because of the shift away from the merit system. Just ask today’s valedictorian, how few an far between the scholarships are for the middle class.
Fleuries on October 5, 2012 at 4:30 PM
No ROTC program at my son’s college. Tuition isn’t so bad, it’s the mandatory room and board charges for freshmen and sophomores that stink. Last year we got a nice grant from the school because I was unemployed. This year they yanked it, and we also lost a PA state grant, so we had to take out a pretty sizable PLUS loan. It was a big snafu too, long story but we don’t plan to borrow any more.
I did have a 529 prepaid tuition plan in Virginia, but we moved to PA and so it only pays the average of VA instate tuition. It’s still a nice amount, about $6500, but not enough to close the gap.
rockmom on October 5, 2012 at 4:36 PM
When I went to my State U. in 1974 the tuition was literally $500 a semester. Now that same college charges $11,000 for in-statestudents and $16,000 for out of state. I went to grad school at Harvard in 1979 and it was only $8500. I borrowed for that and easily paid it off in 10 years.
My nephew graduated with $80,000 in debt from a middling private college. He had a job when he graduated, but it is an entry-level insurance sales job and he is having a hard time keeping up with the payments. He can’t afford a car and has 3 roommates.
rockmom on October 5, 2012 at 4:40 PM
Well, I’m on the tail end of the baby boomers, but I did it a little different. I went to a local community college for the first 2 years, lived at home, and did get Pell grants which covered by tuition.
Then I went to a state school, worked 2 part time jobs to pay all my living expenses, and again got Pell grants that covered the tuition. Graduated in 4 years with no debt. Is that still possible? I’ve heard Pell grants aren’t enough to cover tuition anymore, because of the increases in tuition, even at community college, but not sure if that’s true.
mbs on October 5, 2012 at 4:41 PM
Never mind, I just checked my old community college’s website. Their tuition is 4 times what it was back in the day. Apparently they also have fancy dorms now. That’s just ridiculous.
mbs on October 5, 2012 at 4:47 PM
That was a funny headline. I thought Che was dead…and a lefty.
cozmo on October 5, 2012 at 5:32 PM
Same here, except for the Pell grants. My jobs must have paid better, or college here was cheaper.
Kinda’ different when you pay your own way. You ignore the worthless classes and even your electives (that the school makes you take) are chosen for what they teach instead of the easy “A”. Except for Philosophy. There was no getting around that one.
cozmo on October 5, 2012 at 5:35 PM
I was a typical upper-middle class kid. My folks started saving when I was born, and were able to pay for my first three years of school before the money ran out. I took a year off to earn the rest, and in that year, 9/11 happened.
I swore in.
When I got out, I used the GI Bill to help pay for my last year (it didn’t come close to covering in-state tuition) and worked to cover the rest.
The difference in my attitude towards school in those first three years v. the last year is stunning. I was older, and it was my own money.
Washington Nearsider on October 5, 2012 at 5:48 PM
Colleges need to answer for this. The answer can’t be continuous lending to students until the problem is so great that Congress decides to start forgiving these loans. My impression is that colleges and their administrators are completely out of control.
Start with closing down all the diversity offices and letting go of all the administrators having something to do with being a liaison to someone or something. If the employee isn’t teaching, working in connection with the physical plant, serving in admissions, finanicial aid, libraries/labs, and [name other critical functions], send them packing.
BuckeyeSam on October 5, 2012 at 5:49 PM
But, but, boomers don’t care! They’re bankrupting the gen-whatevs!
davidk on October 5, 2012 at 6:21 PM