Parent PLUS Loan Debt Disproportionately Burdens Black Parents

Student loan debt taken on by parents—especially Black parents, who make up the highest proportion of low-income Parent Plus loan borrowers—further widens the racial wealth gap.

parent plus loan

When student loan debt is the topic of discussion, conversations usually center on a grossly inaccurate stereotype of a millennial who drinks too much Starbucks and needs to cut back on their avocado toast habit. However, the people most impacted are low-income students and parents—especially Black parents who took out loans to put their kids through school.

"Black borrowers are the group most negatively affected by student loans, in large part because of systemic racism, inequitable distribution of wealth, a stratified labor market, and rising college costs," noted an article from Education Trust. Parent PLUS loans are federal loans that parents can take out on behalf of their children toward their college education.

According to a recent study by the Century Foundation, students at historically Black colleges and universities and schools that serve "large numbers of low-income and minority students" relied on Parent Plus loans more than students at any other type of college or university.

Parent PLUS loans are hitting Black parents the hardest, and President Biden's proposal to cancel $10,000 in student debt per borrower will simply not give Black families the relief they need.

"Black borrowers typically owe 50% more in student debt upon graduation than their white peers. Four years after graduation, this gap increases to 100%," stated the NAACP's Student Debt Fact Sheet. "The plurality of outstanding debt is held by borrowers who live in neighborhoods in which the median income is between $20,000 and $40,000. Black people disproportionately live in those neighborhoods and are most affected by student debt."

Parent PLUS loans have higher interest rates and fewer options for borrowers to seek relief, forgiveness, or reduce monthly payments, making it one of the most insidious student loans. 3.7 million US students have parents who owe a combined $104 billion through the Parent PLUS loan program.

"These parents cannot be kept on the fringes of the policy debate," the Century Foundation reported. "The cancellation of student debt, including and especially Parent PLUS loans, is one vital step toward correcting the ills of racial inequality in the United States and enabling many of these borrowers to regain their financial footing."

The Century Foundation also found that of low-income Parent PLUS borrowers, 8 percent of those borrowers are white, 26 percent are Latine, and 42 percent are Black. According to the 2021 Census, Black people make up 13.4 percent of the population.

As inflation across the board rises and the racial wealth gap persists, reform is needed now more than ever in all avenues of student loan borrowing.

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