Doubts About Parent PLUS Loans for Families and Colleges Relying on Them

Report: “Access to What and for Whom? A Closer Look at Parent PLUS Loans”

Author: Awilda Rodriguez

Organization: American Enterprise Institute’s Center on Higher Education Reform

Summary: This report offers context on the hotly debated federal Parent PLUS loan program, which allows parents to borrow up to the full cost of college attendance minus other aid for dependent undergraduate students. The report uses the Title IV loan-volume report for 2012-13 to analyze colleges that have large disbursements in the program, and data from the most recent National Postsecondary Student Aid Study to analyze the demographics of borrowers.

Findings:

• Among four-year colleges that depend on the availability of PLUS loans, few have high graduation rates and most have raised their net prices faster than the inflation rate.
• High- and low-income families exhibit different patterns in their use of PLUS loans, with more-advantaged families sending their children to colleges that are more selective and have higher graduation rates.
• Forty-two percent of parents who took out PLUS loans in 2011-12 were in the bottom half of the income distribution. A similar share did not have a college degree themselves.
• There are not enough good data available to fully assess the program.

Bottom Line: The available data raise questions about whether Parent PLUS loans provide families with access to high-quality colleges.