PLUS Loans: How Much Should Parents Borrow for College?

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I wanted to follow up on yesterday’s post: How Much College Loan Debt Is Too Much?

In that post I talked about what is an acceptable level of college loans that students should assume. That post prompted Stuart, a blog visitor, to ask me this question about PLUS loans:

What about the parents? What is a reasonable amount of student debt for the parents to borrow using the PLUS loan program?

I thought I’d share what I told him:

Unfortunately, there is no one right answer to the question of how much parents should borrow. I can say this, however, you certainly shouldn’t jeopardize your retirement savings by assuming a big college debt.

One way to answer your question is to figure out what your monthly PLUS loan payments would be by using a loan calculator. Here is the link to a Parent Loan Repayment Calculator on the College Board website. After you take a look at what  your monthly obligation would be, you should have a better idea of how much college debt you can handle.

The College Board also has a Parent Debt Calculator that can also help pinpoint how must college debt you could safely assume.

Lynn O’Shaughnessy is the author of The College Solution, an Amazon bestseller, and she writes a college blog for CBSMoneyWatch.

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2 Responses to “PLUS Loans: How Much Should Parents Borrow for College?”

  1. Beatrice says:

    Such a nice resource. Parents need to look at this in order to really put things into perspective.

    In some cases families want to buy the big fancy education without thinking of all 4 years, while others need to see it’s not as bad as they think. These tools should help for both scenarios.

    Schools need to do more on financial literacy like this.

  2. Mrs. Patti says:

    For the Repayment Calculator, the College Board needs to take this to the next level and add a button to click if the parent plans on deferring payments. Wouldn’t that be wonderful to show them what kind of difference that would make?

    They also need to add a few words saying the rate is 8.5% in FFEL and 7.9% in Direct. This must have been developed when College Board was still in bed with Sallie Mae.

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