Squeeze the Parents: New Student Loan Goes Straight to Mom and Dad – WSJ

• Squeeze the Parents: New Student Loan Goes Straight to Mom and Dad – WSJ

• Better make sure your son and daughter earn enought to repay student loan that could delay retirement or other financial issues to parents.

• • “My husband and I got out of school with debt,” she said. “It’s a hard way to start life.”

  • The federal government offers college loans to parents under its Plus loan program. Parents signed up for $10.7 billion in Plus loans during the 2014-15 academic year, according to Mr. Kantrowitz’s analysis of federal data, a 20% increase from five years earlier

  • Franklin & Marshall College last fall because of the relatively low debt number the college touted. The college’s scorecard cites median student debt of $25,000.

  • The average student debt for graduates with a bachelor’s degree is projected to be $37,000 this year, up 78% from a decade ago, according to Mr. Kantrowitz.

  • Despite parents’ contributions, however, large numbers of students are emerging from college with debt loads that critics call unsustainable.

  • Parents also cosign an increasing amount of private undergraduate student debt, more than 90%, according to recent figures tracked by student-loan data firm MeasureOne

  • Parents have long shouldered much of the cost of college and have been taking on increasing levels of debt to do so.

  • “Education loans in general, whether for students or parents, are spreading out the costs over time; they are not cutting college costs,” said Mark Kantrowitz, vice president of strategy at Cappex.com, a website that connects students with colleges.

  • Bernie Pekala, director of student financial strategies at Boston College, acknowledged that including parent loans in this calculation would make the schools appear more expensive.

  • Lenders see the new products as an area of growth in an otherwise sluggish lending environment.

  • An increasing number of private student lenders are rolling out parent loans, which allow borrowers to get funds to pay for their children’s education without putting the students on the hook.

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