How Parent Borrowing Makes College Possible — at a Steep Price — for Black Families

Mom and Dad Are Borrowing

When Robert F. Smith announced during his Morehouse College commencement speech last spring that he was paying off every graduate’s student loans, the initial story was a feel-good tale, a sort of lottery ticket that the millions of students burdened with student debt wish they could win. A second wave of coverage argued how a more egalitarian society would tax all the rich folks to provide affordable education rather than praise a sliver of them for their generous philanthropy.

What got a lot less attention was how much, for many of those graduates, debt was a burden affecting their entire families.

We decided this summer to dig into parent borrowing and the role it’s playing in intergenerational wealth for America’s black families. We teamed up with a group of graduate journalism students at Northwestern University. Their story was published in USA Today on Thursday:

Six-figure parent loans: When college dreams for students mean nightmarish debt for family (USA Today)


The scale of this debt for black families is remarkable. It’s not a little bit bigger. The amount black parents are taking on is proportionately enormous.

Consider Atlanta. This fall there are about 7,000 undergrads walking around Emory University. Their parents borrowed about $7 million in Parent PLUS loans for the year. Eight miles away, sit three of America’s foremost historically black colleges — Spelman College, Morehouse College, and Clark Atlanta University — and roughly 7,600 undergrads. Their families have taken on more than $102 million in Parent PLUS loans for the year. That’s 14 times as much.

2017-18 Parent PLUS Loan volume (Source: U.S. Dept. of Education)

Originally introduced in the 1980s as a way for middle- and upper-income parents to help their children pay for college, Parent PLUS became an option for lower-income parents as well. In part that’s because the program does not check a borrower’s ability to repay, considering only their credit history.

Back in 2011 the Obama administration tightened the lending requirements, but some colleges, notably HBCUs, complained loudly that the change was harming them and their students. The government largely relented and the money flowed again.

Now few low-income white families participate. Just 10 percent of white Parent PLUS borrowers earn $30,000 or less. In comparison, 40 percent of black borrowers have incomes that low.

(Source: National Postsecondary Student Aid Study, 2016)

(Rachel Fishman at New America wrote a great report last year about the program and these racial differences.)

For many students, Parent PLUS loans are packaged on the financial-aid award letters they get from their colleges, along with Pell Grants, loans, and institutional scholarships. They’re shown as an option — one endorsed by the federal government — for how to come up with the money to pay the bill.

But unlike other federal student loans, they’re not capped. You can borrow up to the full cost of attendance.

So after you fill out the FAFSA and the government determines what your “expected family contribution” is, it then makes a loan available that can be far, far larger. Finally, unlike other student loans where we hope a student borrower is going to use future higher earnings to pay for a degree today, a mother’s earning potential isn’t directly improved because her son got a college degree. (You can see why many education policy experts are pretty skeptical of Parent PLUS.)

Colleen Campbell, director of postsecondary education at the Center for American Progress, told the students for the USA Today article that the program is “doing a huge disservice to students of color and families of color when we’re saying that they can borrow however much they want.”

An epilogue to the story of the Morehouse graduation gift: The college announced last month that Robert Smith would be erasing parent loans as well for the class of 2019. Yes, Virginia. There is a Santa Claus.

— Scott Smallwood

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