50-50 Highlights: Colleges Where Parents End Up With Debt

I’ve mentioned before that not all 50-50 schools are affordable or generous with financial aid. Recently, I’ve started looking at Parent Loans for Undergraduate Students (PLUS) loans. As the name indicates, these loans are usually not taken out by the student but by parents on the student’s behalf. This means that they aren’t generally counted in the student debt statistics because it’s not the student’s debt but the parent’s. And the fact the parents can borrow up to the total cost of attendance each year can make them very dangerous loans.

PLUS Loans Aren’t Reported

Information on PLUS loans by college can be hard to come by. Although the Common Data Set asks for the amount of PLUS loans for undergraduates, it’s not reported by the College Board’s Big Future or CollegeData.com. Furthermore, although the PLUS loans are administered by the Department of Education, the information is not part of the College Navigator website or the College Scorecard.

You can find the information on PLUS loans for colleges under the Federal Student Aid Student Data reports under the Direct Loan Program. Not exactly intuitive.

It’s also not very user-friendly. The report shows the number of students who had loans taken out on their behalf and the total amount of loans. However, it doesn’t give you a “base” number to work with such as the total number of undergraduates eligible to receive loans during the same time period. That makes it kind of hard to compare schools.

Which Colleges Have the Most PLUS Loans?

But I’m willing to work with the data provided so I calculated the percentage of participants based on the total number of full-time undergraduates from IPEDS. Could there be problems with this approach? Probably, but it’s somewhere to start looking and this is definitely something people should be looking at.

This is especially true of 50-50 schools. The 50-50 schools had the highest average percentage of full-time undergraduates with PLUS loans on their behalf among both public and private colleges. And they had the second highest average of PLUS loans.

There could be several explanations for this. The students are using the money so that they are actually able to graduate unlike those at colleges with lower graduation rates. The 50-50 schools also have smaller endowments than those colleges that accept less than 50% of students which may be providing more generous financial aid.

Why Do Some Colleges Have More PLUS Loans?

When I looked just at 50-50 colleges and compared those with a high percentage of PLUS loans to the remaining schools, I found several differences. The biggest was the average endowment per student is lower at schools with a high percentage of PLUS loans, especially among private schools. A slightly higher percentage of freshman receive institutional grants at schools with a high percentage of PLUS loans. There was also a somewhat higher percentage of freshman receiving Pell Grants at private schools with high PLUS loans. However, there didn’t seem to be large differences in the acceptance rates, average net price, or average amount of institutional grants.

Given all the liberties I took just creating the PLUS loan percentage and the fact that I have no desire to do meaningful statistical analysis in the data, these could just be coincidences. Yet, it seems only prudent to carefully examine costs and Net Price Calculator results when considering a college with a high percentage of PLUS loans. If you’re applying to any of these schools, make sure you understand your financial aid awards and pay close attention to GPA requirements for keeping merit aid.

The table below lists all 50-50 colleges where 15% or more of the full-time undergraduates had PLUS loans originated on their behalf in 2015-16. There is no way of knowing if the loans are mainly for seniors who are taking out loans for the first time or a group of gapped students who take out the loans every year. As usual, the 4-year graduation rate is used for private colleges, the 5-year rate for public.

50-50 Colleges With PLUS Loans for 15% or More of Undergraduates
(click here for data for all colleges)