Financial Aid Group Calls on Feds to Shore Up Lending to Parents
"As we reported last year, parents are increasingly borrowing through a federal program to fund their children’s college education," ProPublica reports. "Called Parent Plus, the program has no hard limits on what parents may borrow — providing easy money but few options to help manage the debt burden if the bills prove too much. A new report by the National Association of Student Financial Aid Administrators recommends reining in the potential for overborrowing, saying the government should tighten underwriting standards for parent loans. Right now, parent borrowers applying for the loans need only pass a backward-facing check for lapsed debts in their credit history — debt-to-income ratio isn't considered. As a result, the report notes, some parents “accumulate PLUS loan debt over several years that far exceeds their ability to repay." As we reported, financial-aid officers themselves are sometimes demure when it comes to warning families about borrowing beyond their means."
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