Parent PLUS loans are a dubious higher-ed option, study finds
Even with privacy concerns, Rodriguez notes, there are many pieces of the puzzle that are currently not being assembled by the Department of Education, and data analyzing traditional student loans is far more expansive.
You can go wrong
In theory, Akers argues, unlimited access to borrowed capital is not necessarily wrong, as long as parents and students have solid information on risks and costs. But in fact, she says, people don’t do these calculations, partly because the numbers are so complex and the horizon of payoffs and burdens seems so distant.
And then there is the added signal that the government sends by allowing unlimited borrowing up to the total cost of attending school. And the colleges echo that signal by building parent loans into their aid packages.
“The ability to borrow large amounts sends a message that you should be going to college at any cost,” Akers said.
Unlimited parent loans, critics argue, help fuel a mystique that tells parents that they should be willing to pay any price and bear any burden to send their kids to college. This in turn allows the institutions a carte blanche for raising tuition and fees, regardless of their clientele’s actual ability to pay.
“Many of these institutions cannot really afford a lot of low-income students,” Rodriguez argues.
But skeptics are hopeful that parents and taxpayers are beginning to rethink the paradox of access through parental debt burdens.
“There has been a tremendous shift in the narrative,” Akers says. As recently as 2009, she notes, President Obama was touting college graduation as an end in itself. But in his 2013 State of the Union address, he promoted a new website he hopes will help consumers distinguish between good and bad institutions.
“So we’ve gone from ‘everyone should go to college’ without any qualifications,” Akers said, “to now where people are saying that everyone should make this decision very carefully. It’s a critical decision. You can go wrong.”
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