Representative Alexandria Ocasio-Cortez, a New York Democrat, has warned parents on Instagram not to leave money on the table, pointing out that such payments could double or triple the amount of relief some families can receive.
Students often take on college debt in the hope that a degree will help them obtain high-paying jobs that will enable them to pay off their loans quickly. Parents, by contrast, take out loans without any assurances that their incomes will rise, said Kristin Bragg, a researcher at the Urban Institute, a think tank. As a result, parents can be stuck with loan balances for longer periods.
Some parents struggle with repayment. Twenty percent of Black parents who took out PLUS loans defaulted on those loans, compared with 5% of their White counterparts, Bragg and other researchers noted in an April 2019 paper. Parents who took out such loans for children who attended for-profit colleges also defaulted at higher rates than those who borrowed for kids at nonprofit schools.
Parent PLUS loans can be especially burdensome for older people, whether they are nearing or in retirement. A College Board analysis of federal student loan data found that people aged 50 and older held 23% of the federal student loan balance in the second quarter of 2021. That number, which includes undergraduate, graduate and parent loans, further dispels the myth that the only people with student debt are 20-somethings.
“Millions of parents who wanted to help their kids pay for college are being crushed by student debt, leaving them unable to pay off their homes or retire,” Democratic Senator Elizabeth Warren told Bloomberg News. She called the Biden administration’s relief plan “transformational,” and is planning a tour with fellow Massachusetts lawmaker, Representative Ayanna Pressley, to help people apply for forgiveness.
For Joshua Sauberman, a consultant in New York and the eldest of six children, the loan forgiveness program comes as an “incredible relief.” It will help make a dent in the $40,000 balance his mother, a teacher, holds after she took out $50,000 in Parent PLUS loans to finance her youngest child’s college education. (His brother, he noted, will have $15,000 in debt left after he receives $10,000 in forgiveness.)
Sauberman’s mother, who is 68, “is still actively paying off three different kids’ student loans,” he said. The forgiveness “will allow her to retire on time — she'll have a lot more wiggle room to finish paying off all the other student loans."
This article was provided by Bloomberg News.