Limits on parent PLUS loans were eliminated in 1993 by Congress, the researchers at Brookings note. And in 2014, eligibility for the loans was expanded to parent borrowers with weaker credit histories. Since then, at least another 370,000 parents — who would have previously been denied the loans because of an adverse credit history — have been approved, according to the researchers.
"You can be earning $20,000 a year and be eligible to take out $20,000 a year in parent PLUS debt," said Adam Looney, an economist at Brookings and a co-author of the report. "It's a trap for the unwary."
Parents are struggling to repay the loans.
Five years into repayment, parents from the 2009 cohort had just around a third of their debt paid off. Eleven percent of them were in default.
The picture is grimmer still for parents who took out loans to send their children to for-profit colleges. More than 16 percent of those parent borrowers defaulted on their debt within five years.
"We shouldn't force parents to make a choice between sending their kids to college and taking out a loan they can't afford," Looney said.
What if I'm struggling with student debt for a child?
If you took out parent PLUS loans for your child, "you should know there are options for reduced payment and possible forgiveness," said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps student loan borrowers with free advice and dispute resolution.
Parent borrowers may be eligible for reduced payments, Mayotte said, including through extended and graduated repayment plans. If you consolidate the parent PLUS loan into a "direct" loan, you could enroll in an income contingent repayment plan, which caps your monthly payments at a percentage of your income and typically results in the cancellation of your debt after 25 years.
"This can be particularly helpful for retired parents on fixed incomes," Mayotte said.
Parents can also appeal to the Education Department to be put in a so-called alternative repayment plan, Kantrowitz said, which also comes with reduced monthly payments.
Many parent borrowers don't realize they are potentially eligible for public service loan forgiveness, Mayotte said. That program allows certain not-for-profit and government employees to have their federal student loans canceled after 10 years of on-time payments.
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