If you want your kids to go to college but can’t afford the bills, the federal government has a deal for you that will blow your mind. You can borrow the entire cost – minus any other aid your child receives – through a Parent PLUS loan. Moreover, your income – and thus your ability to repay the debt – doesn’t matter. As long as you don’t have one of a handful of black marks in your recent credit history, you can borrow six figures even if your take-home pay puts you below the federal poverty level.

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This program is essentially subprime loans for college, hiding in plain sight. And it’s not just parents who are taking advantage; their children will be saddled with this debt for years to come.


The Parent PLUS program was created in the early 1980s to help middle-income families pay for college. But today, it’s increasingly used by low-income families with few other options. And because the loans are not based on the ability to repay, they often originate with terms that are far from favourable.

parent PLUS

For instance, Parent PLUS loans currently have an interest rate of 7.08%, which is higher than the rates on both private student loans and federal student loans for undergraduates. And unlike other student loans, Parent PLUS loans are not eligible for income-based repayment plans or loan forgiveness programs.


According to a Consumer Financial Protection Bureau report, the number of Parent PLUS loans has quadrupled over the past decade, reaching a record high of more than $7 billion in the 2014-2015 school year. And with college costs continuing to rise even more, parents will likely be turning to this program in the future.


If you’re a parent considering a Parent PLUS loan, it’s important to understand the risks involved. This type of loan can be a helpful way to pay for college if you’re confident you’ll be able to repay it. But if you’re not sure you’ll be able to make the payments, you could end up putting your child’s future and financial stability at risk.


What do you think about Parent PLUS loans? Have you ever considered taking one out?


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