Families with students attending historically Black colleges and universities (HBCUs) are poised to experience “a greater fallout” from Parent PLUS loans, compared with college families overall, according to an analysis from Northwestern University’s Medill News Service. Created in 1980, the federal loan program gives parents the ability to help finance their child’s college education free of borrowing limits; however, Parent PLUS loans come with higher interest rates than student loans and are not linked to income-based repayment options.
To understand Parent PLUS loans’ impact at HBCUs, journalists examined data from the Department of Education and the National Center for Education Statistics. Looking at the 2016 National Postsecondary Student Aid survey (NPSAS), they found that more than 23 percent of HBCU families had Parent PLUS Loans, compared to 8.4 percent of college families overall. While NPSAS data from 2011-2012 and 2015-2016 show overall Parent PLUS borrowing decreasing slightly, Parent PLUS borrowing by HBCU families increased during that time period. Moreover, more than 20 percent of HBCU families—double the rate of families overall—were relying on Parent PLUS loans to cover at least 30 percent of their college costs.
According to the Brookings Institution, parents overall are borrowing three times the amount they did 25 years ago for college costs. Today, more than 3.4 million Parent PLUS borrowers owe at least $87 billion. The Wall Street Journal reported earlier this year that the federal program helped realize a 44 percent increase in student loan debt held by American senior citizens since 2010. During the 2017-18 academic year, the Parent PLUS loan program disbursed $12.7 billion in new loans, up from $3.3 billion in 1999-2000.
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Researchers have cautioned that this growth in Parent PLUS loans is disproportionately burdening low-income families and widening the racial wealth gap. Medill News notes that racial disparities in Parent PLUS borrowing “becom[e] more pronounced when we break down borrowing by parents’ income,” reporting that 40.2 percent of Black families with Parent PLUS loans in 2016 had annual household incomes of $30,000 or less, compared with 10.4 percent of white families with Parent PLUS loans.