A new report from the Texas Public Policy Foundation has found that parents’ student loans amount to 30% of student loan debt, with parents often borrowing tens of thousands of dollars for their child’s education. Here’s what you need to know.
1 current trend in student loans for the week of September 20, 2021
1. New report highlights cost of sending kids to college with PLUS loans
A report from the Texas Public Policy Foundation shows that parents borrow a median of $ 23,415 in federal PLUS parental loans for their child’s education, with those loans accounting for about 30 percent of student debt in the United States. The data aims to educate both policymakers and parents about loans and reforms that can be made at the federal level.
Parent PLUS Loans are federal student loans available to parents of dependent undergraduate students. Parents can borrow up to the full cost of their child’s school attendance, with fixed interest rates currently standing at 6.28 percent.
Since parents can borrow up to the full cost of schooling, debt can easily climb much higher than the median. In addition to overall borrowing trends, the report lists median parental debt amounts for specific colleges and programs, many of which exceed $ 100,000.
Gallery: 10 Ways to Reduce Your Student Loans (GOBankingRates)
How it affects student loans
Most of the conversation around student loan debt and the rising cost of college centers revolves around the students themselves, but the Texas Public Policy Foundation report shows how affected parents are. The report says the data “will help parents make more informed decisions when helping their children choose and pay for college” and “will inform policy makers when they reform the Parent PLUS program.”
If you want to borrow MORE to finance your child’s education, limit your loan to what you need. Parent PLUS’s interest rates are higher than other federal student loans, so borrowing up to $ 100,000 for your child’s education could end up being extremely expensive.
Key to take away
New data study shows parents have a median monthly payment of $ 252 when they fund their child’s college education with PLUS parent loans.
Here’s how to prepare
Whether you are new to the area of student loans or are already in advanced repayment, it is wise to stay on top of how your student loan rates might change. As 2021 continues, more opportunities for cheaper loans or loan cancellation may open up; Keep an eye on the Bankrate student loan news center for the latest trends.