Student Loans: Parent Plus Loans
President Joe Biden announced his administration's long-awaited plan for student loan forgiveness on August 24. But now, a group of senators is calling on the administration to reconsider Parent PLUS loan forgiveness to match Pell grants, which receive the highest forgiveness under the plan.
Richer Live Stream: How to Get Out of Student Loan Debt
Social Security: Women Make $354 Less a Month Than Men - Here's Why
"The senators are asking the administration to extend an additional $10,000 in student debt forgiveness to Parent PLUS borrowers whose children were Pell Grant recipients and to ensure that improvements are made to student loan forgiveness programs, including for Parent borrowers PLUS," the statement said.
Under the plan, up to $10,000 in federal student debt can be offered to borrowers earning less than $125,000 (or $250,000 if married). That number rises to as much as $20,000 in student loan forgiveness for Bill Grant recipients. In addition, the White House announced an extension of the student loan moratorium "for the last time" — until Dec. 31, according to a White House fact sheet. Parent Plus and City Plus loans are also eligible.
According to the statement, there are more than 3.6 million Parent PLUS borrowers who have more than $107 billion - a large percentage of them are parents whose children have received Pell grants.
The group of senators highlighted the fact that Parent PLUS loans have less favorable terms than other types of federal student loan programs, including higher interest rates and origination fees.
"High origination fees and high interest rates on Parent PLUS borrowers have forced lower-income, black, brown, and older borrowers to face tough trade-offs to keep up with student loan payments, resulting in potential loan defaults or, in this case for some seniors, compensation in Social Security benefits," they wrote in the letter to Biden.
They added, "These borrowers demonstrated significant financial need at the time they took out the PLUS loan, as evidenced by the fact that their students qualify for Pell Grants based on family income." "Like student borrowers who received Pell grants, these borrowers also face many barriers to successful repayment and must be given relief."
Poll: Do you think student loan debt should be forgiven?
Sallie Mae explains on its website that Parent Plus loans are federal student loans issued directly to parents.
“The government looks at your credit, provides some flexibility in repayment options and the ability to fill funding gaps after you've exhausted your federal student loans, grants and scholarships. For the 2021-2022 school year, the Parent Plus loan has an interest rate of 6.28% plus a 4.228% origination fee,” according to the site.
After some confusion following the August 24 announcement, Education Minister Miguel Cardona tweeted: “I saw your questions about eligible forbearance loans. All @usedgov loans are eligible! Share this post and spread the word.”