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Parents Shouldn’t Drown in Debt Just to Pay for College

By Michael Schneider, President
McPherson College

Parents make incredible sacrifices for their kids. They’re even putting off retirement, dipping into their retirement savings, and taking out new loans – just to help their kids graduate from college. Nationally, about 3.6 million parents owe more than $103.6 billion in federal Parent PLUS loans. But parents with kids at McPherson College are creating a new trend.

McPherson College’s fall enrollment has risen annually for the past seven years. And while overall fall 2021 enrollment is up again, our total parent debt is down nearly 17% over last fall.  This sharp reduction in parent debt is due to the Student Debt Project – and the newly launched Kansas Commitment program, which guarantees Pell grant-eligible Kansas residents pay no tuition at McPherson College. Both programs provide MC families financial freedom — making it possible for students to earn their degrees without piling up unnecessary debt.


The Parent Debt Crisis

The media so often focuses on student loan debt, ignoring the fact that families are accumulating significant amounts of debt to fund a student’s education. A few things to consider about the parent loan debt in the United States:

  • Over the past 7 years, Parent PLUS loan debt has grown from $62.2 billion to $103.6 billion – a 67% increase, compared with a 39% increase in loans for undergrads.
  • From 2003 to 2016, the average combined student and parent debt for Parent PLUS borrowers was nearly $38,000.
  • According to Sallie Mae’s 2021 report, about 9% of college costs are paid by parent borrowing.
  • Parent PLUS interest rates are high compared to things like auto loans, averaging more than 7% over the past decade. In addition, the government charges parents a 4% fee on top of the loan. The government makes money off Parent PLUS loans, according to the Congressional Budget Office.

The Parent PLUS program was originally designed as a way for higher-income parents to afford private college tuition, yet in 2016 more than 200,000 families who made less than $40,000 took Parent PLUS loans. As the cost of public education has risen, more low- and middle-income parents have started seeking these loans. Unfortunately, government estimates indicate that today at least 1 in 8 parents will default on these loans, making the debt an irrevocable hardship on people who should be enjoying an empty nest and a well-deserved retirement.

While fixing the $1.7 trillion student loan crisis remains a never-ending debate in Washington, the reality is that it continues to grow unchecked. And even if student loan debt is somehow addressed by Congress this year, there’s no guarantee that relief for parent debt will be included in the legislation.

Colleges have no business saddling parents with unmanageable debt. We think colleges owe students and parents opportunities to make college affordable without massive debt—that’s why McPherson College developed the Student Debt Project and Kansas Commitment.


How MC Eliminates Debt

Today, more than one-third of our students are enrolled in the Student Debt Project, a mentorship program that teaches financial literacy skills and lets students apply earned income toward their student debt. McPherson College matches 25% of the funds the students contribute toward debt reduction. For students in the program this year, the average projected debt at graduation has been reduced by $10,000 per student.

This fall, MC’s vision of affordable college expanded further with the introduction of the Kansas Commitment, a program that guarantees full-tuition packages to Kansas residents who are Pell grant eligible and have a transfer or high school GPA of 2.5. The packages are renewable annually for students who continue to meet the eligibility criteria. It’s just one more way we can provide our students financial freedom as they plan a future without student loan debt.

Deanna Curtis is a teacher and single mom. At one point, she had four kids at MC at the same time while she was also in college for an advanced teaching degree. She was able to get her students through McPherson College without any private or Parent PLUS loans. Her twin sons were both in the Student Debt Project and Jake graduated in May without taking any student loans.

Deanna shared that, “the worry about college debt consumes you as a parent. You lay awake at night worrying about it. As a parent, you do without so you can help your children go to college.” The Student Debt Project taught her kids work ethic, determination, responsibility with their time, and to be thoughtful about how they spent their money.

McPherson College isn’t waiting for Washington to find a solution to the student debt crisis. Rather, we’re creating our own roadmap and developing our own financial aid options so we can provide our students the financial freedom they deserve.

As more students take advantage of our Student Debt Project and Kansas Commitment initiatives, we expect our percentage of students graduating with little to no debt will increase. We also expect fewer MC parents will need to apply for Parent PLUS loans.

If Washington could be this creative, the issue of student debt would be solved, and parents would breathe easier knowing they won’t be sacrificing their retirement nest egg to pay off college loans.