As the costs of college have risen, so has the number of parent loans and the amount borrowed by parents.


A recent Wall Street Journal article discussed this rise. Citing, “over 17% of graduates in the 2011-12 academic year had parent Plus loans borrowed for them, which are loans available directly from the federal government, each with an average $33,800.”


Just how big a rise is that from previous parent borrowing? “That’s up from 13% with about $23,300 on average in the 2007-08 academic year.”


The Wall Street Journal also put together this graphic that illustrates the issue:



As parent borrowing isn’t going away soon, the article included some tips for parents:

  • Families should exhaust other options before turning to parent loans. 
  • Parent loans typically come with costlier terms than loans for students. 
  • If borrowing is unavoidable, families should first borrow the maximum they can in federal direct student loans (between $5,500 and $7,500 annually for dependent students whose parents aren’t turned down for Plus loans), which have better rates.”
  • For families with equity in their home, a cheaper option could be a home-equity line of credit.” The interest on such a loan may be tax-deductible.
  • Another option for parents is education loans offered by companies or state-related education funding entities.