Parents Borrow the Most to Send Their Kids to Art Schools, HBCUs

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Parent student loan borrowing has risen by 27% over the past five years — and according to the latest Student Loan Hero study, an especially large portion of those funds are going to art schools and Historically Black Colleges and Universities (HBCUs).

Student Loan Hero analysts collected data from the National Center of Education Statistics and Federal Student Aid to find out where parents are borrowing the most in terms of federal parent PLUS loans. As you’ll see, art, music and design schools, and HBCUs rank near the top of the list.

Key findings

  • Art, design and music schools make up half of the 10 schools where parents take on the most parent PLUS loans for their children — as well as 23 out of the top 50 schools with the most such debt. (Read more)
  • HBCUs comprise 4 of the top 10 schools for parent PLUS debt, and 8 of the top 50. (Read more)
  • The average parent PLUS borrowing for full-time students ages 24 and under at the American Musical and Dramatic Academy in New York was about 10 times higher than the average amount borrowed across the other schools. (Read more)
  • Spelman College, a noted HBCU in Atlanta, has 47% of students have parents borrowing PLUS loans on their behalf. (Read more)
  • Parents often borrow significantly less for public HBCUs than for private ones. (Read more)

Parents take on most debt to send their kids to art school

The rise in parent PLUS loan borrowing mentioned above seems to be hitting some parents more than others, depending on the school. Our survey found that institutions where parents are borrowing the most include a large proportion of art, music and design schools.

In fact, these schools made up five of the 10 schools where parents borrow the most PLUS loans.

The American Musical and Dramatic Academy headed the national list, with nearly 59% of undergraduate students ages 24 and under having parents who took out one or more PLUS loans on their behalf. What’s more, parent borrowing per full-time student was 10 times higher than the average across other schools for the 2017-2018 year ($21,205 versus $2,120).

Design school Columbia College Hollywood in Los Angeles also showed high parent borrowing — $15,200 per student age 24 and under — as did the Fashion Institute of Design & Merchandising, also in Los Angeles — $12,042 per student.

The reason behind all this borrowing isn’t completely clear, but part of the issue may be that many of these schools are private, and private schools tend to cost more. In particular, the five art-focused schools that appeared on our top 10 rankings for parent PLUS borrowing are all private.

But that said, not all art schools have outsized proportions of parent PLUS loans. At Juilliard in New York, for example, the average parent PLUS origination per full-time student age 24 and under was $1,641, better than the overall average. At the Massachusetts College of Art and Design, the average parent PLUS loan amount borrowed was $1,800.

Parents also borrow lots to cover tuition at HBCUs

Besides art schools, the other college segment that kept popping up on the list was that of HBCUs. Four HBCUs were among the top 10 schools where parents take on the most PLUS debt, and eight were in the top 50.

For example, Spelman College, the prestigious Atlanta-based women’s school, came in at No. 2 on the list, with an average parent PLUS loan origination of $16,227 per student age 24 and under. What’s more, more than 47% of Spelman undergraduates had a parent who borrowed loans to cover their education — and among the parents who did borrow, the average size of the loan was $34,223 in the 2017-2018 academic year.

Clark Atlanta University came in at No. 4 on the list, with an average parent PLUS loan of $13,066 per student, closely followed by Morehouse College, also in Atlanta, with an average of $12,759.

Reasons behind this pattern of parent borrowing at HBCUs could involve challenges faced by both the schools and the families whose children attend them.

HBCUs tend to have smaller endowments than other colleges, which can lead to less financial aid and fewer scholarship opportunities. Given this reality, combined with the racial wealth gap in the U.S., it’s unfortunate but not surprising that parents have to take on greater debt to send their children to these schools.

Also note that, while parents often borrow significant amounts for private HBCUs, they tend to take out less for public ones. The average amount of parent PLUS borrowed for full-time students ages 24 and under was a far more modest $2,758 at the public Norfolk State University in Virginia, and was $3,407 at North Carolina Central University, also a state school.

The 100 colleges with the most parent borrowing

Below are the top 100 colleges where parents borrowed the most in parent PLUS loans to finance their child’s education for the 2017-2018 academic year.

Meanwhile, if you want to see how parent borrowing compares at all the major schools we surveyed, as well as a map of where the schools are and the downloadable data set, head here.

Don’t take on too much debt — especially parent PLUS loans

While many parents may be eager to help their kids pay for college, they — along with their children — should be careful not to take on too much debt. This is all the more true for parent PLUS loans, since they have some of the highest interest rates of any federal loan type: 7.08% (as of July 1, 2019) with an origination fee of 4.236% (as of Oct. 1, 2019).

Another disadvantage to parent PLUS loans is that they’re only eligible for one of the four income-driven repayment plans — Income-Contingent Repayment — and then, only if parents apply for Direct Loan Consolidation first.

While parent PLUS loans can be useful, take a look at these other possible steps before making any decisions:

  • Consider the return on investment of your child’s degree. While you may want to support their dreams, encourage them to think about their potential future earnings. If the cost of tuition far outweighs their projections, it might be wise to consider a less expensive school.
  • Help your child apply for scholarships and grants. If they can score gift aid for college, their cost of attendance should go down accordingly.
  • Explore options for private student loans. If you can score a private loan rate that’s lower than the interest on PLUS loans, then that might be the best route. But note too that private lenders don’t offer the same repayment options as the federal government does.

For parents who are already paying back loans, have a look at tips on how to repay parent PLUS loans. It’s also worth mentioning that you may be able to transfer parent loans into your child’s name through refinancing.

Regardless of your situation, though, keep educating yourself about your loans and repayment strategies. By taking a proactive approach, you can find ways to manage your debt and ease its burden.

Published in News & Policy