Parents with student loans could fall into -2-

Still, the debt has caused a lot of stress. Before Sisto began the process of consolidating the loans to make his monthly payments more manageable, he said he would wake up in the middle of the night wondering if he would go bankrupt. “Are we going to lose the house that we’ve spent [decades] living in? Our dream house for 20 years?” he said he remembers asking himself.

 With the loans consolidated, the payments are "doable," he said, though he describes them as a second mortgage. "Our 401(k)s are the only savings right now." 

 "The government did a good job of getting people to get their kids to go to college," he added. "Parent PLUS loans allowed that to happen, but they also put people in stressful debt many, many years after that's over." 

 Now, instead of addressing those challenges, the federal government is limiting people's ability to pay, said Mayotte of the Institute for Student Loan Advisers. 

 For policy to have impact, colleges need to take action 

 The challenges that borrowers face in repaying the loans is part of why lawmakers decided to limit the amount parents could take on, but experts are skeptical that the decision will make the debt more manageable for future borrowers. 

 "The caps, for you to get a positive outcome, require action by the higher-education institutions, [and] the higher-education institutions are going to be in a pinch," said Rodriguez of the Education Debt Consumer Assistance Program, adding that many colleges and universities can't afford to bring tuition down. 

 And, by changing repayment options at the same time, lawmakers have closed off "the only safety valve that consumers currently have to pay Parent PLUS loans," said Rachel Fishman, the director of the higher-education program at New America, who has written extensively about the dangers of the Parent PLUS program. 

 "They haven't done any of the things to prevent low-income borrowers from [taking out] the loans, nor have they offered a solution for borrowers who get in over their heads," she said. 

 Mayotte noted that, since schools aren't held accountable when parent borrowers default on their loans, there's no incentive for them to counsel parents to limit borrowing. Traditionally the government has made the most money from Parent PLUS loans, she said, but with these shifts - and the challenges parents face repaying their debt - she expects that to change. 

 "The default rate is going to shoot way up on Parent PLUS loans," she said. 

 Read on: Trump administration looks to shift student-loan responsibilities to Treasury Department 

 -Jillian Berman 

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03-28-26 1042ET

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