Written By Melanie Lockert
The Parent PLUS Loan program is available exclusively to parents who want to borrow money toward their child’s higher education costs. In this guide, we cover Parent PLUS student loan statistics, average Parent PLUS Loan debt and more.
Overview of Parent PLUS Loans
The U.S. Department of Education offers Parent PLUS Loans to eligible parents. The child must be a qualified dependent and an enrolled undergraduate student as well. Additionally, parents must have a strong credit history; those who don’t might need an endorser (cosigner) to get approved.
Parent PLUS Loans are the sole responsibility of the parent borrower, even if the funds are technically used for their child’s education. Parent PLUS Loans offer loan amounts up to the school’s cost of attendance (minus financial aid), making it an easy way to cover educational costs.
However, that convenience also comes with higher interest rates, fewer repayment options, and an origination fee.
Outstanding Parent PLUS Loans and borrowers
As college costs have increased over the years, so have the amount of Parent PLUS Loans that’s been borrowed. The Federal Student Aid website tracks student loan debt data over the years and publishes it. We’ve compiled the most recent data available, up to Q3 2022.
As of Q3 2022, outstanding Parent PLUS Loans stood at $106.3 billion, compared to $65.1 billion in Q1 of 2015. That’s an increase of 63% in seven years.
That increase is troublesome for many Parent PLUS borrowers, who may not have the income available to make monthly payments.
According to a November 2021 report entitled, “Student Debt and the Federal Budget” by the Bipartisan Policy Center:
“One-fifth of Parent PLUS borrowers and 40% of all Black Parent PLUS borrowers have annual household income below $30,000. Even more startling, the average Parent PLUS borrower in the bottom income quartile borrowed nearly as much to help finance a year of college ($10,051) as their average reported annual income ($14,140).”
To make matters worse, Parent PLUS Loan borrowers only have three repayment options: the Standard Repayment Plan, Graduated Repayment Plan and Extended Repayment Plan.
The only way to access one of the Income-Driven Repayment (IDR) plans is through loan consolidation. Only after Parent PLUS Loan borrowers undergo a federal Direct Consolidation Loan can they access the Income-Contingent Repayment Plan (ICR).
Under ICR, borrowers pay 20% of their income, which can be double that of other IDR plans. A Direct Consolidation Loan-and-ICR strategy is the only route Parent PLUS Loan borrowers have for student loan forgiveness. The exception is if parent borrowers pursue the double-consolidation loophole. However, borrowers will still need to make student loan payments for 25 years before being eligible for forgiveness.
Average Parent PLUS Loan debt
Looking at the numbers above, you can see the fluctuations over time. Although the outstanding balances increase and decrease based on student loan repayment, it’s clear that Parent PLUS Loan debt is increasing overall.
Taking the raw numbers above, we divided outstanding balances by the number of student loan borrowers to find the average Parent PLUS Loan debt per borrower. We’ve used Q4 data or the most recent data for each year (only Q3 for 2022 is currently available).
Based on the information from Federal Student Aid, as of 2022, the average Parent PLUS Loan debt is $29,528. Although that might not sound like a huge amount, it depends on the parent’s income.
Aside from repaying this college debt, parents still have their own expenses and are also closer to retirement or might be dealing with divorce. Adding to the cost of federal Parent PLUS Loans are the high interest rates, which are several points higher than other types of federal student loans.
Interest rates for Parent PLUS Loans
Not only do Parent PLUS Loans have limited repayment plans available, but they also come with steep rates that quickly add to the cost. Here are the fixed interest rates for Parent PLUS Loan over time.
| Disbursement period | Fixed rate for Parent PLUS Loans |
|---|---|
| July 1, 2022 to June 30, 2023 | 7.54% |
| July 1, 2021 to June 30, 2022 | 6.28% |
| July 1, 2020 to June 30, 2021 | 5.30% |
| July 1, 2019 to June 30, 2020 | 7.08% |
| July 1, 2018 to June 30, 2019 | 7.6% |
| July 1, 2017 to June 30, 2018 | 7% |
| July 1, 2016 to June 30, 2017 | 6.31% |
| July 1, 2015 to June 30, 2016 | 6.84% |
| July 1, 2014 to June 30, 2015 | 7.21% |
| July 1, 2013 to June 30, 2014 | 6.41% |
| July 1, 2012 to June 30, 2013 | 7.9% |
The bottom line
Parent PLUS Loans are increasing student loan amounts — but what happens after taking out these loans isn’t clearly documented. However, the effect of repayment might harm low-income parents and parents of color, given the high cost.
The average Parent PLUS Loan debt is felt more by people whose incomes are close to their debt load, or worse if their loan balance is more than their annual income. The good news is that Parent PLUS Loans are eligible for potential loan cancellation proposed by President Biden.
If you want help managing your Parent PLUS Loans, get support from Student Loan Planner.
