Finally. Parent PLUS Institutional Default Rates are Here.

U.S. Department of Education releases default data with Scorecard update
Blog Post
Jan. 12, 2021

For years now, data on federal Parent PLUS loan repayment status have been a black box. We’ve been able to get some answers through Department of Education surveys and lifetime default rates through the president’s budget, but these small data points fall far short of what is needed to understand the repayment experiences of millions of Parent PLUS borrowers. Today, the Education Department's latest College Scorecard data release finally sheds light on parent borrowers’ loan statuses two years out from entering repayment and, for the first time, we now have institutional default rate data. The data release revealed that some colleges and universities, many of them for-profits, have high Parent PLUS default rates.

Currently, colleges and universities face sanctions, such as loss of being able to offer federal loans, if their three-year cohort default rate (CDR) exceeds 30 percent, or if their one-year rate exceeds 40 percent. While the new Scorecard default rates aren’t calculated in the same way as official CDRs, they do give a good snapshot of the speed at which some borrowers default within two-years. It is the closest approximation of understanding how parent borrowers fare in repaying their loans.

First, an important caveat is that nearly three-quarters of colleges and universities had their parent loan default data suppressed in the new release, due to low numbers of borrowers. But for those that weren’t suppressed, fifteen schools, of which nine are for-profits, are above the 30 percent threshold. If there were a calculated three-year cohort default rate for Parent PLUS, these may be the colleges and universities that would run afoul of it.

PLUS loan default rates

At New America, we’ve argued that colleges and universities should be held accountable for Parent PLUS default rates, with schools that have egregiously high default rates losing access to offer these loans. With Parent PLUS repayment outcomes largely left in the dark until now, though, the program has been able to operate without strings attached for the colleges that offer them, while families pay the price.

That’s why these data are so important. In combination with other recent data released, which show the median Parent PLUS debt for students in particular institutions and programs and for the parents of low-income (Pell) students at those schools, policymakers and researchers can have a better sense of where PLUS loan borrowers may be borrowing more than they can reasonably expect to repay and how the portfolio is faring overall.

Still, the data are imperfect and there are more questions than answers about the program. In particular, we hope the Department will soon begin to offer data showing repayment outcomes over a longer time horizon than just two years. Those with Parent PLUS loans enter repayment immediately upon disbursement, unlike federal student loans, unless they choose to defer until the child graduates from the program. Any sort of default rate needs to be viewed on a longer-than two-year time horizon given the length of time it takes to default. The longer the time horizon, the more accurate the calculation will be — and the better the data will be for policymakers.

Edited 01/14/20 to clarify that the newly-released data are not calculated as cohort default rates, but remain the best existing data of percent of parents who experienced default within two years of entering repayment.

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Higher Education Data and Transparency