September 21, 2024 - WASHINGTON, D.C. — U.S. Senators Alex Padilla (D-Calif.) and Chris Van Hollen (D-Md.), along with U.S. Representative Alma Adams (D-N.C.-12), have introduced the Parent PLUS Parity Act, bicameral legislation to ease the burden of student loan debt for parent borrowers who helped their children pay for higher education.

Senator Alex Padilla (D-Calif.)

Nationwide, approximately 3.9 million borrowers have outstanding Parent PLUS loan balances totaling $112 billion. While these loans allow parents of dependent undergraduate students to borrow money to pay costs not already covered by the student’s financial aid package, current law excludes borrowers from the Parent PLUS and Federal Family Education Loan (FFEL) programs from most income-based repayment plans.

Among other provisions, the Parent PLUS Parity Act makes parent borrowers eligible for repayment plans created by the U.S. Department of Education under the Biden-Harris Administration. This legislation comes after Padilla joined Van Hollen and several of his Senate colleagues in urging the Biden-Harris Administration to provide financial relief to parent borrowers.

“Parents taking out loans to help their kids pay for higher education deserve the same loan forgiveness and relief options as other borrowers,” said Senator Padilla. “More and more low-income families, especially Black and Latino parents, rely on the Parent PLUS program every year but have limited loan repayment options. By expanding parents’ access to the same repayment benefits their kids would receive, we can help close the racial wealth gap and expand debt relief for underserved families.”

“Millions of parents who struggled to help their kids pay for college are now trapped in unsustainable debt – and it’s not just hurting them, it’s holding back our entire economy. While the Biden-Harris Administration has taken important steps to expand income-based repayment options so students can pay off their loans, parent borrowers have been excluded from these programs, offering them little to no recourse. Our legislation will help those families chart a path to clear their debt and regain their financial footing,” said Senator Van Hollen.

“The student debt crisis is an intergenerational crisis preventing Americans young and old from unlocking the social and economic mobility promised by a higher education. Parent PLUS borrowers uniquely struggle under the weight of student debt but have been excluded from many of the most impactful efforts to make student loan payments affordable. The Parent PLUS Parity Act will help change that and ensure that these borrowers have access to the same affordable repayment options available to all other borrowers and have access to critical pathways to relief. We applaud Senator Padilla, Senator Van Hollen, Congresswoman Adams and their colleagues for introducing this critical piece of legislation,” said Aissa Canchola Bañez, Policy Director, Student Borrower Protection Center.

“At the Student Debt Crisis Center, we are proud to endorse the Parent PLUS Parity Act which will expand access to Income-Driven Repayment (IDR) plans and IDR forgiveness to all borrowers, including parents with parent PLUS loans. This bill will help millions of parents who took out student loans to support their children in college and who now find themselves struggling to meet their monthly payments. This is one step towards a more fair and just student loan system, and brings us one step closer to achieving our goal of ending the student debt crisis,” said Natalia Abrams, President & Founder, Student Debt Crisis Center.

Established in 1980, Parent PLUS loans were initially intended to assist higher-asset families, but as tuition has skyrocketed and the purchasing power of the Pell Grant has fallen, families with limited resources, particularly families of color, have increasingly turned to Parent PLUS loans to make up the shortfall. The consequences of this have been enormous, trapping thousands of low-income American families under a crushing financial burden.

Between 1996 and 2018, the number of Parent PLUS recipients under the federal poverty line rose by an astonishing 350 percent. In 2020, the average Parent PLUS loan debt held was $37,970, a 40 percent increase from 2000. In 2015, 40,000 disabled or retired Parent PLUS borrowers had their Social Security benefits garnished after defaulting on their loans.

Black parents are struggling disproportionately: the share of Black Parent PLUS borrowers with incomes below $30,000 nearly tripled from 2008 to 2018. In 2018, 44 percent of Black Parent PLUS borrowers had an annual income below $30,000 compared to only 10 percent of White Parent PLUS borrowers.

Currently, Parent PLUS borrowers are excluded from most income-based repayment plans, including the SAVE Plan, the PAYE Repayment Plan, and the IBR Plan. Parent PLUS borrowers are also not eligible to discharge their loans in cases where their child becomes disabled and face additional barriers to obtaining Public Student Loan Forgiveness (PSLF). In their letters to Secretary Cardona, Padilla and Van Hollen urged the Education Department to use the extent of its authorities to provide relief for Parent PLUS borrowers. As a result of these efforts, the Department included Parent PLUS borrowers in its new hardship discharge program in the proposed student loan relief regulations announced in April 2024.

The Parent PLUS Parity Act makes necessary statutory changes to ensure Parent PLUS borrowers can pursue additional avenues for debt relief and to protect these borrowers against Republican attacks on the Department of Education’s student debt relief programs.

This legislation will help families tackle intergenerational debt, ensure equal access to programs available to other borrowers, and provide urgently-needed assistance to millions of forgotten Parent PLUS borrowers by:

• Expanding the income-driven repayment plan options for Parent PLUS and all FFEL borrowers to all income-driven repayment plans and any forthcoming plans issued by the Department of Education, including the new SAVE program, PAYE, and IBR. 

• Making Parent PLUS borrowers eligible for discharge if their child on whose behalf they’ve taken out loans becomes eligible for Total and Permanent Disability discharge.

• Making Parent PLUS borrowers eligible for automatic discharge if their child on whose behalf they’ve taken out loans has their own loans discharged under Borrower Defense.

• Making Parent PLUS borrowers eligible for PSLF if their child on whose behalf they’ve taken out loans serves the standard amount of time (120 months) in qualifying public service employment.

• Directing the Secretary of Education to create a new hardship category program that will permit Parent PLUS borrowers to apply for loan discharge if they meet certain requirements based on income, borrower age, and other factors.

The Parent PLUS Parity Act is cosponsored by Senators Cory Booker (D-N.J.), Tim Kaine (D-Va.), Bernie Sanders (I-Vt.), Tina Smith (D-Minn.), Elizabeth Warren (D-Mass.), and Peter Welch (D-Vt.).

The legislation is endorsed by NAACP, National Education Association, Student Borrower Protection Center, The Institute for College Access & Success (TICAS), Student Debt Crisis Center, Project on Predatory Student Lending, Education Trust, Justice in Aging, and the Century Foundation Higher Education Team.

Senator Padilla has consistently advocated on behalf of students and their families to increase access to higher education. He has led numerous calls urging President Biden to provide meaningful student debt cancellation, along with multiple letters urging U.S. Secretary of Education Miguel Cardona to leverage his authority under the Higher Education Act to provide expanded student debt relief to working and middle-class borrowers.

Padilla previously cosponsored the College for All Act to make college tuition-free and debt-free for working families. He also cosponsored the Pell Grant Preservation and Expansion Act, bicameral legislation that would nearly double the Pell Grant maximum award, index the maximum award for inflation, and expand the program to include Dreamers.

A fact sheet on the bill is available here.

Full text of the bill is available here.
Source: Senator Alex Padilla