What is a Parent PLUS loan? Why do HBCU students have so much debt?

When single mom Elizabeth Cain sent her son to college, she did what many American families are doing to bridge the gap between scholarships, student loans, and tuition: she took out a Federal Parent PLUS loan. .

Her son Chance entered Morehouse College, a historically black school this year. Cain is a freelance educational therapist and is in a masters program where she racked up $ 11,000 in student debt. Now the New Yorker has taken out a Parent PLUS loan of $ 39,000 for her son.

“I try not to worry about that stuff because it will consume me,” Cain said. “I try to take it one day at a time.”

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While the PLUS loan makes it easy for parents to help their children pay for their education, program administrators are under no obligation to check whether families can handle the debt.

This is a problem that hits African American parents particularly hard.

For many families, the federal parent loan program is often the last piece of the financial package needed to make their college dream come true. While this sounds like a lifeline, the PLUS program can weigh on families, especially low-income Black families, for generations.

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“This puts a strain on any social and economic mobility that may arise for black families in particular,” said Colleen Campbell, director of post-secondary education at the Center for American Progress. “Once you add Parent PLUS debt to any student debt. the student accumulates, which erases any potential benefits or gains the parent has made in terms of their own wealth.

The Parent PLUS Loan program was introduced in the 1980s as a way for middle and upper income parents to keep their assets liquid while helping their children pay for their education. It has since become more popular among low-income parents because administrators only check a borrower’s credit history, not their ability to repay the loan.

Few low-income white families take out the loan. Only 1 in 10 white Parent PLUS loan borrowers earn $ 30,000 or less. In contrast, 40% of black borrowers earn that amount or less, according to the 2015-16 National Post-Secondary Student Assistance Study data on students whose parents see them as dependents.

“It’s a very flexible loan standard,” Campbell said.

In 2011, the federal government tightened the lending standard, making it more difficult for parents to get the loans they needed to enroll their children in college. The HBCUs and other schools pushed the government to relax the standard, and soon the MORE money poured in again.

Angela Carter also sent her son Isaiah to Morehouse College. She said a PLUS loan is worth the risk. In the long run, Carter said, this was the only way her son could get the level of education that would then give him the chance to attend an Ivy League graduate school.

“This is an opportunity we have to seize,” Carter said.

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As a former student of another historically black school, Clark Atlanta University, Carter wanted his son to attend Morehouse. She feared her son would feel isolated in other schools and hoped he would benefit from the sense of brotherhood that the college encourages.

“We also wanted him to learn the rich history of African Americans who have made a difference in the world,” Carter wrote in a text message.

The prestige factor attracts many black students to HBCUs. But many HBCUs cannot depend on a graduate base for donations like wealthier private colleges can, said Caitlin Zaloom, a professor at New York University. This results in higher tuition fees and a higher debt burden on students and their families.

The wealth gap in America between black and white families is also evident in college spending. Besides having less wealth and income than other Americans, black families cannot always borrow money from other sources, including grandparents or other family members, a Zaloom said.

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“Education is an extremely important value for African American families who aspire to upward mobility,” Zaloom said. “They just have to do a lot more to get their kids to college than the other groups.”

Black families can feel the cost of a college degree for generations.

Brunella Jeter took out a Parent PLUS loan for her daughter Shaniqua, who attended the University of Texas almost ten years ago.

“If I had known what a Parent PLUS loan was, I would never have signed it. I would have made her get all of her financial aid and let her be in charge of the university, ”Jeter said.

Now Shaniqua is following the same path as her mother. She also took out a PLUS loan so her son could attend Morehouse this fall.

“Now I have to find a way to help my daughter finance this bill,” said Brunella Jeter, while continuing to pay off her own loan of $ 120,000 PLUS.

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The federal government should reform the PLUS program and allow income-tested refunds, suggested Lodriguez Murray of the United Negro College Fund. This would limit the amount of loan repayments to what families can afford. Unlike other federal loans, the Parent PLUS loan repayments cannot be adjusted based on the borrower’s income.

Scholarship organizations and charities should also help the most needy students, he said.

Rachel Fishman, deputy research director for New America’s education policy program, suggested a limit on the size of PLUS loans based on household income. Too often, she says, families borrow more money than they can afford.

Morehouse’s mother and Chicago resident Carmelita Farrah called PLUS Loans a “scam,” but said the program was the only way she could get her son to go to college.

“Where we come from, young black boys, 18, 19, they can’t do it. They get shot, ”Farrah said. “The obstacles are stacked against him as a black man. So what will make them different? Hope an education. After, a career. Because it’s a fight. It really is. “

Contribution: Open Campus, a non-profit media organization focused on higher education