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The Subprime PLUS Loan Crisis: How Dozens of Universities Steer Low-Income Families to Debt They Can't Afford. Education Policy & Higher Education

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Title: The Subprime PLUS Loan Crisis: How Dozens of Universities Steer Low-Income Families to Debt They Can't Afford. Education Policy & Higher Education
Language: English
Authors: Stephen Burd, New America
Source: New America. 2026.
Availability: New America. 740 15th Street NW Suite 900, Washington, DC 20005. Tel: 202-986-2700; Fax: 202-986-3696; Web site: https://www.newamerica.org
Peer Reviewed: N
Page Count: 48
Publication Date: 2026
Sponsoring Agency: Joyce Foundation
Document Type: Reports - Descriptive
Education Level: Higher Education
Postsecondary Education
Descriptors: Student Loan Programs, Debt (Financial), Private Colleges, Public Colleges, Federal Programs, Parents, Low Income, Paying for College, College Students
Geographic Terms: District of Columbia, New York (New York), Alabama, Louisiana
Laws, Policies and Program Identifiers: Federal Direct PLUS Loan Program
Abstract: A New America report identifies 41 universities that appear to be steering low-income families to Parent PLUS loan debt they cannot afford, at the same time that they are providing large tuition discounts to wealthier students. The list includes 23 selective private universities and 18 public flagship and research institutions, nearly half of which are in the South. Collectively, these 41 universities, many of whom work closely with private, for-profit enrollment management consultants, spent $2.4 billion of their own financial aid dollars on students who lacked financial need in 2023, according to the latest data available. Nearly $2 out of every $5 these schools spent on institutional aid that year went to non-needy students--those whom the federal government deems able to afford college without financial aid. Meanwhile, more than 32,000 families of Pell Grant recipients who had either graduated or left these schools in the recent past were stuck with PLUS loans they took out to pay for their children to attend these institutions. These families carried a median Parent PLUS loan debt load of nearly $30,000 each. For many of these families, the amount they owed came close to or exceeded their yearly earnings. A potential subprime PLUS loan crisis is looming. It's hard to see how encouraging low-income families to take on debt that they probably can't repay will end in anything but disaster, unless the government takes decisive action to contain and undo the damage.
Abstractor: As Provided
Entry Date: 2026
Accession Number: ED680371
Database: ERIC
FullText Text:
  Availability: 0
CustomLinks:
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PubType: Report
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  Data: A New America report identifies 41 universities that appear to be steering low-income families to Parent PLUS loan debt they cannot afford, at the same time that they are providing large tuition discounts to wealthier students. The list includes 23 selective private universities and 18 public flagship and research institutions, nearly half of which are in the South. Collectively, these 41 universities, many of whom work closely with private, for-profit enrollment management consultants, spent $2.4 billion of their own financial aid dollars on students who lacked financial need in 2023, according to the latest data available. Nearly $2 out of every $5 these schools spent on institutional aid that year went to non-needy students--those whom the federal government deems able to afford college without financial aid. Meanwhile, more than 32,000 families of Pell Grant recipients who had either graduated or left these schools in the recent past were stuck with PLUS loans they took out to pay for their children to attend these institutions. These families carried a median Parent PLUS loan debt load of nearly $30,000 each. For many of these families, the amount they owed came close to or exceeded their yearly earnings. A potential subprime PLUS loan crisis is looming. It's hard to see how encouraging low-income families to take on debt that they probably can't repay will end in anything but disaster, unless the government takes decisive action to contain and undo the damage.
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      – Text: English
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      Pagination:
        PageCount: 48
    Subjects:
      – SubjectFull: Student Loan Programs
        Type: general
      – SubjectFull: Debt (Financial)
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      – SubjectFull: Private Colleges
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      – SubjectFull: Federal Programs
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      – SubjectFull: Parents
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      – SubjectFull: Low Income
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      – SubjectFull: Paying for College
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      – SubjectFull: College Students
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      – SubjectFull: District of Columbia
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      – SubjectFull: New York (New York)
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      – SubjectFull: Alabama
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      – SubjectFull: Louisiana
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      – SubjectFull: Federal Direct PLUS Loan Program
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