Student-Loan Debt and the Burden on Parents
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What new government data reveals the scale of U.S. student-loan debt?
Here's your money briefing for Monday, December 7th. I'm J.R. Whalen for The Wall Street Journal. Americans currently hold about $1.5 trillion in student loan debt. A big chunk of that is held by parents who've taken on a greater share of their children's college costs in recent decades, many of them through the government's Parents Plus program.
These aren't just parents who may not have liquidity and are using this program to get it. Some of these borrowers are low income parents. They're parents who are making $30,000 a year and borrowing $30,000 a year and the government lets them do it.
Coming up, we'll talk with our reporter, Andrea Fuller, about the financial strain that student debt can put on families and what colleges are doing to make higher education more accessible to middle and lower income students. That's after the break.
Newly released government data paints a stark picture of the mountain of student debt held by Americans and by parents in particular. Our reporter Andrea Fuller has been going through the numbers and she joins us to discuss.
How much parent-held debt comes from the federal Parent PLUS program?
Andrea, thanks for being here.
Thanks for having me.
So it's been well documented that student loan debt is an economic weight on Americans. But what makes this batch of data from the government so significant?
So this is the first time we've really known how much parent debt is out there on a school by school level. The government has released, you know, total parent loan volume for a number of years, but we've never really known where the schools that people are borrowing the most. And now we do. And it's actually quite astounding to see some of these numbers. There are schools with, you know, median parent loan debt of $100,000 in that ballpark.
So the government data tracked the amount parents have borrowed through a federal loan program called Parent Plus. How does that work?
How does the Parent PLUS loan program work and who qualifies?
The way it works is if you're a student, you're 18, you're going to college, you can only get up to about a lifetime $31,000. if you're a dependent student. The problem is, is that a lot of colleges cost a lot more. We're seeing a lot of schools with tuition upwards of $50,000 a year. And now, And increasingly, parents are having to fill that gap. And if you don't have access to the private loan market, the government offers what's called a parent plus loan. And there's a minimal credit check. Most parents can get them. Not everyone qualifies, but most people do. And you can borrow as much money up to the cost of attending school. college. And so that's how you see these parents ending up with, for one student, upwards of $100,000 in loan debt because they're taking out $25,000 a year to fill that gap between what college costs and what the student is able to borrow through their own government lending program.
Which types of colleges leave parents with the highest Parent PLUS balances?
College tuition is one of the largest financial commitments a family has, but not all schools are equal in that respect. What are the schools where parents have accumulated the most debt?
The schools with the highest parent plus debt aren't schools like Harvard and Princeton, the Ivy League schools that have international recognition. They tend to be either art schools, historically black colleges, which are notoriously lacking in, you know, endowments and resources because of the history of how they were formed. And, um, other sort of smaller private universities like High Point University in North Carolina that may not have the brand name of somewhere like Princeton. And these schools are actually the ones that are leaving families in the most debt. They're good schools, but they don't have the resources of these schools with multi-billion dollar endowments. NYU is another example of a school that is an elite school but doesn't have the endowment size of a Harvard, and the median parent debt there is upwards of $70,000 a year.
So the number one college is Spelman in Atlanta, which is an HBCU, historically black college. And the median debt there for parents of graduating students was $112,000, which is a huge number for any family.
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Chapters
7 chapters
1
What new government data reveals the scale of U.S. student-loan debt?
0:05–1:13
2
How much parent-held debt comes from the federal Parent PLUS program?
1:13–1:57
3
How does the Parent PLUS loan program work and who qualifies?
1:57–3:10
4
Which types of colleges leave parents with the highest Parent PLUS balances?
3:10–5:20
5
Which specific schools have the largest median parent loan debt (like Spelman and NYU)?
5:20–7:41
6
Are parents likely to be able to repay large Parent PLUS balances and what are the risks?
7:41–8:53
7
How might Parent PLUS data affect debates over student loan forgiveness and college affordability?
8:53–9:23
Speakers
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