Understanding the Parent PLUS Loan Debate in the Context of Black Families

Abstract

Purpose

The purpose of this chapter is to expand our understanding of the types of Black families that are using Parent PLUS, the types of institutions that rely on Parent PLUS the most, and the outcomes of students who use Parent PLUS to finance their first year of college.

Methodology/approach

I used descriptive analyses on several datasets collected by the U.S. Department of Education: IPEDS, BPS:04/09, and NPSAS.

Findings

The data revealed that (a) of Parent PLUS borrowers, greater shares of low-income Black families are borrowing than White families; (b) many institutions that serve Black students (including HBCUs) give out small amounts of institutional aid but also have much smaller endowments than non-Black-serving institutions; and (c) many families who borrow in their first year stop borrowing in their second year – and of those who stop borrowing, many transfer institutions.

Research limitations

Serving as a starting point in the conversation to Black families borrowing PLUS, this study is not causal and is limited by the unavailability of student-level data on PLUS borrowers. Estimating from nationally representative studies and examining Black-serving institutions is the next-best approximation.

Practical implications

The efforts to standardize financial aid award letters and provide better consumer information to parents must also include PLUS. Moreover, we need to find sustainable solutions for PLUS-reliant institutions to increase their capacity to provide institutional aid.

Originality/value

This chapter contributes to conversation around a controversial financial aid product that has been largely understudied, and in particular for Black families who borrow PLUS at the highest rates.

Citation

Rodriguez, A. (2015), "Understanding the Parent PLUS Loan Debate in the Context of Black Families", Race in the Age of Obama: Part 2 (Research in Race and Ethnic Relations, Vol. 19), Emerald Group Publishing Limited, Leeds, pp. 147-170. https://doi.org/10.1108/S0195-744920140000019008