A single mom, she earns around $40,000 a year working at a drug rehabilitation clinic in New Jersey. She hopes to soon complete a drug counseling certification that may increase her salary but acknowledges she’s far from zeroing out her balance.
“What I’m looking at right now is paying it over 20 years, which will make me 82,” Rizzo said.
She joins a growing list of parents 60 and older who are delaying their retirement because of Parent PLUS loans, a program that started in the early 1980s to help parents pay for their children’s college educations. A recent NerdWallet survey found that for up to 26 percent of parents or guardians with Parent PLUS, also known as Direct PLUS, loan debt will not retire as initially planned.
Rizzo said she took out seven Parent PLUS loans to pay for her daughter’s eight semesters at Skidmore College in New York.
She said providing a quality education for her daughter was so important that she moved to the affluent New Jersey town of Ridgewood so Emily, now 26, could attend high-ranked public schools. Rizzo encouraged her daughter to attend the best college she could, regardless of cost.
“I felt like for college, I didn’t want to shortchange my kids,” said Rizzo, who also has a son, adding that she attended workshops at her daughter’s high school to learn about college financial aid options.
What started as a loan plan for middle-income families has evolved into a wide-reaching program with few restrictions, said Rachel Fishman, deputy director for research in education policy at New America, a Washington think tank.
“You can see parents easily taking out tens of thousands of dollars in these loans for each year,” she said. “And then at the end of an undergraduate career, they can easily accumulate over $100,000.”
Fishman said she’s seeing more lower- and middle-income families get in over their heads.
“What’s very different is this is not a co-signed loan,” she said. “This is a loan a parent takes out in their own name; the student has no responsibility to pay this loan back.”
To qualify for a Parent PLUS loan, borrowers have to undergo a credit check, but essentially there’s no cap on the amount they can borrow, and parents or guardians can take out as much as the entire cost of attendance.
