Student Loan News: Parent Borrowers Struggle to Repay Federal Loans

 January 31, 2020
How Student Loan Hero Gets Paid

How Student Loan Hero Gets Paid

Student Loan Hero is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). Student Loan Hero does not include all lenders, savings products, or loan options available in the marketplace.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, commissioned or otherwise endorsed by any of our network partners.


We’ve got your back! Student Loan Hero is a completely free website 100% focused on helping student loan borrowers get the answers they need. Read more

How do we make money? It’s actually pretty simple. If you choose to check out and become a customer of any of the loan providers featured on our site, we get compensated for sending you their way. This helps pay for our amazing staff of writers (many of which are paying back student loans of their own!).

Bottom line: We’re here for you. So please learn all you can, email us with any questions, and feel free to visit or not visit any of the loan providers on our site. Read less

Welcome to Student Loan News, a weekly summary of developments and events affecting college debt in the U.S. Join us each Friday for a look at goings-on that could impact your own student loan situation.

Most parents fail to repay children’s student loans on schedule, Texas study finds

When student loans lead the news, it’s the student cast as struggling. A new study of student loan borrowers in Texas, however, shows that a majority of parents taking out federal loans for their children’s college education also have trouble with timely repayment.

The study, released this month by the nonprofit Trellis Company, found that just 45% of Parent PLUS Loan borrowers in the state complete their repayment without interruption. In fact, among the study’s sample of nearly 60,000 Texas-based borrowers, 31% were delinquent at least once, 8% of borrowers had defaulted, and 7% hadn’t reduced their balance within seven years of starting repayment.

Parents of children attending Minority-Serving Institutions were more likely to experience hiccups in repayment. Just 40% completed their repayment on time, while 10% experienced at least one default, and 8% weren’t able to decrease their debt’s starting balance.

This is a significant problem, especially if we assume that parents in other states face a similar situation. By the close of 2018, 3.6 million parents nationally owed $89.9 billion in Parent PLUS Loans. On the bright side, their annual borrowing held steady during the 2010s after doubling in the previous decade.

“These difficulties appear to have a cascading effect on their broader financial lives,” the study’s authors concluded. “Parents in our study report making significant sacrifices to provide educational opportunities for their children, sometimes jeopardizing their retirement savings.”

How it affects YOU: If you’re a parent considering borrowing on behalf of your student, weigh the pros and cons of Parent PLUS loans before signing on the dotted line. And if you’re already in repayment on PLUS Loans, consider ways to optimize that repayment. Enrolling in Income-Contingent Repayment, for example, could lighten your monthly load.

Also in the news…

  • A U.S. Navy veteran due to receive a bankruptcy discharge of his $221,385.49 student loan debt faces a new obstacle: His loan servicer appealed the potentially landmark ruling, according to Yahoo! Finance.
  • New York Chief Judge Cecelia G. Morris (who awarded the Navy veteran’s controversial discharge mentioned above) introduced a program for borrowers and their servicers to undergo court-supervised mediation before resorting to bankruptcy, the Wall Street Journal reported on Monday.
  • An Ohio law school graduate is being denied the opportunity to practice law in the state partly due to her $300,000-plus student loan debt, Forbes reported late last week. Some states have laws that strip borrowers of their professional licenses if they default on student loans.
  • Virginia passed a bill of rights for student loan borrowers through its House on Monday, according to the Virginia Mercury. If it becomes law, it would echo the bill of rights passed at the federal level in 2015, as well as those passed by other states.
  • Private lender CommonBond announced a new product Wednesday for borrowers who refinance student loan through the company. The new option — dubbed SmartSave — would see borrowers contribute any cash they saved by refinancing into a high-yield checking account.
  • A professional video game player paid off his mother’s student loans thanks, in part, to having 1.4 million followers on streaming platform Twitch, according to a report by PCGamesN.

News can be useful, but if you want some deeper advice, take a moment to sign up for the Student Loan Hero weekly digest email and get valuable financial knowledge sent straight to your inbox … for free!