Parents who took on student loans for their kids' educations aren't included in Biden's new debt relief proposals

Students from George Washington University wear their graduation gowns outside of the White House in Washington, DC, on May 18, 2022

Stefani Reynolds / AFP)

• The Education Department proposed reforms to income-driven repayment plans for student-loan borrowers.
• But borrowers with parent PLUS loans are not included in these proposals.
• An administration official said current law does not allow PLUS borrowers to repay debt on income-driven plans.

President Joe Biden has plans to significantly lower monthly student-loan payments for most borrowers — but parents won't get to reap the benefits.

On Tuesday, Biden's Education Department officially put forth its proposals to reform income-driven repayment (IDR) plans, which in the past have intended to give borrowers affordable monthly payments based on their income with the promise of loan forgiveness after at least 20 years. 

Up until this point, the plans have been flawed due to confusing paperwork and errors tracking payments accurately, and Biden's proposals would fix those flaws by cutting payments for undergraduate students in half, preventing interest from building on a borrower's principal balance, and shortening the timeline to receive loan forgiveness for those who started with a smaller loan balance.

"Your student loan payments will be affordable," Education Secretary Miguel Cardona told reporters on a Monday night press call. "You won't be buried under an avalanche of interest. You won't be saddled with a lifetime of debt. This is a promise to students who dream of a college degree. This is a promise to parents who want a better future for their children. This is a promise to the American people that at long last, we will fix a broken system and make student loans affordable."

But parents who took out PLUS loans — a type of federal student loan that allows a parent to borrow up to the full cost of attendance for their child's education — are left out of these reforms. A senior administration official told reporters on Monday that the Higher Education Act of 1965 does not allow parent PLUS loans to be repaid on an IDR plan, and the department is not at this time proposing any changes to that law. 

This means the only option parent PLUS loan borrowers have at this time is the income-contingent repayment plan — the most expensive type of plan — which requires them to pay 20% of their discretionary income for 25 years, and the remaining balance after that time period is forgiven.

For reference, Biden's proposed changes would require undergraduate borrowers to pay 5% of their discretionary income, down from the current 10%. Advocates celebrated the proposed changes, but criticized the exclusion of parent PLUS borrowers in these reforms. 

"The Department's plan remains out of reach for many of the students and families who are forced to take on some of the greatest amounts of debt in hopes of achieving social mobility," Persis Yu, deputy executive director of advocacy group Student Borrower Protection Center, said in a statement.

"It ignores the reality that low-income families—especially low-income families of color—are more likely to rely on Parent PLUS loans or need to get a graduate degree to earn the same salary as their wealthier white peers."

And Natalia Abrams, executive director of the Student Debt Crisis Center, said in a statement that the proposed plan "repeats past mistakes that leave too many holes in the student loan safety net."

"Parents are excluded from the new benefits even though many are shouldering their children's debt on top of their own debt," Abrams said, adding that she believes "more work must be done to provide comprehensive relief for every borrower."

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