by Awilda Rodriguez
American Enterprise Institute
May 05, 2014
One of the thorniest ways a family can pay for college is through federal Parent PLUS loans. The Parent PLUS loan program provides unsubsidized loans to any parent on behalf of their child up to the cost of attending college and after accounting for all other student aid. What distinguishes Parent PLUS loans from other federal loans is that interest rates are higher than on undergraduate loans; payments begin immediately; and parents have a limited set of repayment options. Yet, PLUS loans have become an increasingly popular financial tool as college tuitions soared and college financial aid packages failed to keep pace, and defaults on PLUS loans have also increased. Meanwhile, most PLUS loan recipients are not gaining access to institutions with high graduation rates, and institutions are being rewarded for increasing tuition. The U.S. Department of Education needs to collect and report better data on the PLUS Program.

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