Financing Adulthood: The Risks and Hopes of Parent Borrowing

• In Event: Promising Scholarship in Education Research: Dissertation Fellows and Their Research

Abstract

Financing Adulthood: The Risks and Hopes of Parent Borrowing

Funding children’s college expenses can be a family project, often requiring substantial savings from parents and educational debt from children, but parents also borrow to support their children’s postsecondary ambitions. Parent borrowing exemplifies the risks and hope current higher education policies demand of families working to provide a middle-class life for their children. Using three datasets from the National Center for Education Statistics, this research focuses on parent borrowing through the federally-funded Parent Loans for Undergraduate Student (PLUS) program. First, this study investigates the risks parents take when they borrow through PLUS by identifying borrowing patterns across parents. Second, I consider whether parent borrowing delivers on parents’ hopes by examining whether PLUS influences children’s postsecondary outcomes or eases their path into adulthood. Educational debt is often treated as solely a middle-class issue, but I investigate patterns across the income distribution to determine if it is more universal. My project finds that parent borrowing is highest among high- and upper-middle income families, demonstrating that college costs are beyond the means of even advantaged families. In addition, rather than supporting young adult children as they transition to adulthood, parent borrowing has little educational benefit for students once they are enrolled and PLUS loans are associated with greater financial stress for young adult children. By focusing on parent borrowing through the PLUS program, this project contributes to existing arguments identifying the limitations of educational debt as a policy for providing equitable postsecondary opportunities and discusses the implications for higher education policy.

Author

• Kennan Cepa, University of Pennsylvania