As more families rely on loans to fund higher education, it’s not just young adults who are struggling with the burdens of student loan debt—many parents struggle too. With parents doing whatever it takes to provide their children with the opportunity for a higher education, they often end up with more student loan debt than their children.

The popular Parent PLUS loan program allows parents of undergraduates to borrow directly from the government, with few restrictions, but much higher interest rates than other types of federal student loans, and fewer repayment options. According to the New York Times, the volume of Parent PLUS loans has grown significantly in recent years, from 14% of undergraduate loans in 2013 to over 25% last year, with parents now owing $100 billion in PLUS loans.³

26% of Parent PLUS borrowers say they’ll be unable to retire as expected because of their loan burden.⁴

With more parents borrowing to fund higher education, the student debt crisis extends beyond graduates to their parents, who have fewer working years to pay off the debt and save for retirement.

So what options do parents have?

While many parents are able to make loan payments in the early years after graduation, the debt may become more difficult to manage over time, especially as they approach retirement age. Parent PLUS loans are eligible for many of the same student loan forgiveness programs as federal student loans, but these programs have narrow eligibility criteria and can be burdensome to navigate.

Another option is to refinance private or Parent PLUS loans to a lower interest rate or a shorter term with a private lender, either in the parents’ name or by transferring the loan to the child. Not all lenders allow parents to transfer PLUS loans to their children, but our partner, Laurel Road is one that does allow such transfers, provided the child can meet the lending requirements. This is a helpful option for families struggling to manage student loan debt.

¹“Trends in College Pricing and Student Aid 2020,” College Board, 2020: https://research.collegeboard.org/pdf/trends-college-pricing-student-aid-2020.pdf.
²“How America Pays for College,” Sallie Mae, 2019: https://www.salliemae.com/content/dam/slm/legacy/assets/research/hap/HowAmericaPaysforCollege2019.pdf
³“A Parent Trap? New Data Offers More Dire View of College Debt,” The New York Times, December 2020:https://www.nytimes.com/2020/12/24/upshot/student-debt-burdens-parents-too.html
⁴NerdWallet Harris Poll, July 2021: https://www.nerdwallet.com/article/loans/student-loans/student-loan-debt-spans-generations-and-many-arent-ready-to-resume-payment