Senators push for more forgiveness for parents with student debt

eDemocratic senators are calling on President Biden to expand the size of the student loan forgiveness available to parents who took out loans to pay for their children college education. But experts also want Congress to act to prevent low-income parents from facing this financial burden in the future.

Both argue that borrowers who took out Parent PLUS loans — which are federal loans with higher interest rates and fees that parents can use to help their children pay for college — are being left behind in the push for relief of the debt. Those who take out Parent PLUS loans are disproportionately low-income black and Latino families, and many struggle to pay off that debt decades after their child graduates.

Under The Biden administration’s plan for student debt reliefpeople who make less than $125,000 a year will get up to $10,000 forgiven — including parents took out loans for their children’s education.

Borrowers who attended college with Pell Grants, designed to help low-income students, are eligible for forgiveness of up to $20,000. But this does not apply to parents whose children received Pell Grants. Parents are only eligible for this additional relief if they themselves were Pell Grant recipients.

IN letter to Biden on Monday, eight Democratic senators, led by Maryland Sen. Chris Van Hollen, asked the administration to extend that additional $10,000 in forgiveness to Parent PLUS borrowers whose children were Pell Grant recipients to include Parent PLUS borrowers into easier income-based repayment plans and allow parents to participate in the Public Service Loan Forgiveness Program as long as their child has a job that meets public service qualifications.

“These borrowers demonstrated significant financial need at the time of their PLUS loan origination, as evidenced by the fact that their students qualified for Pell Grants based on family income,” they wrote in the letter to Biden. “Like student borrowers who received Pell Grants, these borrowers also face multiple barriers to successful repayment and should receive relief.”

More than 3.6 million Parent PLUS borrowers currently owe a total of $107 billion in student loan debt, which is about 10% of all student loan debt in the US

While the Parent PLUS program originally targeted middle-class families, most Parent PLUS recipients today also receive Pell Grants, making them one of the lowest-income groups of students. according to a report published in May by the Century Foundation, a progressive think tank.

In 2018, 42% of Black Parent PLUS borrowers and 26% of Latino Parent PLUS borrowers were expected to contribute nothing to a college education, meaning they are too poor to afford out-of-pocket college costs. based on US Department of Education calculations.

This, combined with high loan interest rates, helps explain why many Parent PLUS borrowers struggle to repay these loans, especially since some parents are working without the income of a degree.

Peter Granville, a senior policy fellow at the Century Foundation who authored the May report, found that 28 percent of students who used a Pell Grant and a Parent PLUS loan to pay for college had parents who did not attend college – parents who would therefore not be eligible for the additional $10,000 in debt forgiveness under the Biden administration’s plan.

The average Parent PLUS borrower owes $29,600 when their child graduates. But on average, these borrowers still owe 55% of their original balance after 10 years and 38% after 20 years, according to the Century Foundation report.

Granville supports the changes Van Hollen and other senators have urged Biden to make, but would also like to see Congress act to prevent Parent PLUS loans from burdening more families going forward.

“The ball is really in Congress’s court to change the underlying factors that make Parent PLUS such a burden for some families,” Granville says. “We need enough grant money so that low-income families don’t have to take out these loans in the first place.” Only Congress can do this nationally.

He would like Congress to invest in endowments at historically black colleges and universities where use of Parent PLUS loans is greatest; Pell Grant expansion; and working to make college more affordable overall, so families won’t have to rely heavily on Parent PLUS loans and other student loans in the future.

“How will they reduce the college costs parents face? Will it make the terms of Parent PLUS loans more favorable to parents?” he says. “Once the cancellation is done, we must continue to pressure Congress to take action for future student loan borrowers.”

More must-see stories from TIME


Write to Katie Riley c [email protected].

More must-see stories from TIME


Write to Katie Riley c [email protected].

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *