101 Colleges Where Parents Borrow Less

 March 4, 2020
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Most student debt statistics cast the spotlight on students. But here’s a stat that puts their parents under the glare: 3.6 million borrowers owe the federal government $96.1 billion in Parent PLUS Loans.

Those are concerning numbers, as parents, unlike their children, are taking on debt at a time when they should probably be prioritizing retirement savings.

Of course, just as some schools’ students tend to take on less debt, there are schools where parents generally borrow less. The following 101 schools — see the end of this report for a map and full list — saw moms and dads borrow the least during the 2017-2018 school year.

Key findings

  • Six colleges of the 1,348 we analyzed — three public and three private — registered zero Parent PLUS Loan borrowing: Berea College in Kentucky, God’s Bible School & College in Ohio, Highline and Yakima Valley Colleges in Washington, North American University in Texas and the U.S. Merchant Marine Academy in New York.
  • The majority (81) of colleges on our top 101 list are public schools.
  • Just 2% of students under 25 had parents borrow federal loans on their behalf to attend one of the top 101 schools.
  • Despite lower rates of borrowing, parents who took on debt for one of the top 101 schools still received substantial loans: They averaged a 2017-2018 disbursement of $8,571.

Parents borrow less for students attending public schools

Three of the top six schools on our list of 101 — Berea College, God’s Bible School & College and North American University — are private programs, but that trend didn’t continue further down the list.

In fact, 81 of the 101 programs with the least parent borrowing were at public colleges and universities. That’s not completely surprising, as private schools typically have higher price tags, leading to increased student borrowing overall.

Some public schools, including Highline and Yakima Valley Colleges in Washington, did well in our rankings because they’re inherently less costly. As community colleges attended primarily by in-state students, tuition expenses are far lower.

The average cost of a public two-year school for in-district students ($3,440, according to the College Board) is dwarfed by the price of a public four-year program ($9,410) for in-state students.

Little parent borrowing still adds up to a lot

About 5% of adults have taken on education debt for their children or grandchildren, according to the Federal Reserve. But at our top 101 schools, just 2% of students under 25 received help from mom or dad in the form of a federal loan.

Despite these seemingly lower rates of borrowing, the amounts of debt are still considerable. Parents who borrowed federal loans for their children to attend one of the 101 schools on our list averaged a disbursement of $8,571 — for a single school year.

If these same parents borrow for multiple years — as many as four, perhaps — their Parent PLUS Loan debt could easily balloon. After all, the Department of Education allows parents to borrow up to the full cost of attendance in PLUS Loans.

Unfortunately, a recent study performed by the nonprofit Trellis Company, found that most Parent PLUS Loan borrowers fail to repay their debt on time, inhibiting family finances.

How parents can minimize student loan borrowing

For both parents and students, borrowing for college should be a last resort. Unfortunately, it’s all but inevitable for many families that have trouble saving in advance. According to our 2019 research, almost 8 in 10 parents reported it was more difficult to save than they anticipated.

Still, even without a flush 529 college savings account, it’s possible to minimize parental borrowing.

Attending a lower-cost, close-to-home school is a start. Pointing a child toward a two-year or four-year public school could decrease tuition costs, and if they’re willing to live at home, you can save big on room and board as well.

Additionally, an in-depth scholarship search can also help a prospective or current college student rack up gift aid that doesn’t need to be repaid. The search should include pursuing state grants, particularly for families with proven financial need.

Convincing your child to take ownership of the process could also be helpful. They might be up for taking on a summer or work-study job to help defray college costs.

If borrowing becomes a must, parents should also consider private student loans as an option. With strong credit or a cosigner, the family could qualify for significantly lower interest rates than those attached to federal Parent PLUS Loans. Just keep in mind, however, that private loans carry far fewer repayment protections than governmental debt.

Published in News & Policy, Press, Research