By Susan Tompor
Detroit Free Press
WWR Article Summary (tl;dr) The high cost of college has caused nearly half of college grads with student loans to take out the maximum amount of loans allowed under the federal student loan program. Meanwhile, parents are picking up the overflow when the student reaches the student loan limits.
Detroit Free Press
College debt is building and, increasingly, parents are on the hook.
Where do you turn when you’ve maxed out on federal student loans? Ask Mom and Dad to take out some parent loans, too.
The average cumulative federal student loan debt that parents borrow even exceeds what’s being taken on by students, according to new research.
On average, parents owed $32,596 for their cumulative loans taken out under the Federal Parent PLUS program at college graduation in 2015-16.
On average, college grads with bachelor’s degrees owed $29,669 in student loans in 2015-16, according to Mark Kantrowitz, publisher and vice president of research for Savingforcollege.com.
To be sure, a much smaller percentage of parents borrow than students. About 69 percent of students took out student loans in 2015-16, compared with about 14.4 percent of parents, Kantrowitz said.
The high cost of college, and the inability of some families to save much money, has caused nearly half of college grads with student loans to take out the maximum amount of loans allowed under the federal student loan program.
“The parents are picking up the overflow when the student reaches the student loan limits,” Kantrowitz said.
In many cases, the student could even agree to repay the Parent PLUS loans.
“Some parents will have side agreements with the student where the student agrees to make the payments,” Kantrowitz said.
Not everyone who borrows, of course, is borrowing to the max.
One Dearborn, Mich., mother I talked with took out about $6,000 in loans about five years ago when her daughter began attending Central Michigan University.