EFC Research Brief Exposes the Downsides of the Federal PLUS Student Loan Program 

WASHINGTON, Dec. 6, 2023 /PRNewswire/ -- Education Finance Council (EFC), the national trade association representing nonprofit and state-based higher education finance organizations, announces the release of a new research brief titled, "The Perils of PLUS Loans: Examining the Effects of the Federal Government's Most Unfavorable Student Loan Program." The document summarizes trends in Direct PLUS Loan program borrowing and reveals how the federal student loan system frequently overburdens the very constituencies it tries to support.

"Direct PLUS Loan borrower outcomes information is notoriously difficult to find. Our synthesis of publicly available data sheds light on the most inscrutable federal higher education program. The results are as regrettable as they are clear. The federal Direct PLUS Loan program too often saddles borrowers with student debt they cannot hope to ever repay," said EFC President Gail daMota.

"Students and taxpayers alike deserve a fair deal from the federal government, but the status quo falls woefully short of this basic expectation. That is why EFC gives policymakers four recommendations that will reduce borrowers' risk exposure and improve college affordability for the next generation of students. EFC members stand ready to work with politicians of all ideological persuasions to reform the Higher Education Act and eliminate the worst consequences of the Direct PLUS Loan program."

EFC's new paper highlights several startling facts about the Direct PLUS Loan program. Among other trends, the research brief shows that these student loan borrowers are increasingly from disadvantaged backgrounds, receiving larger loan balances, and taking longer to repay their education debts. Evidence also suggests the Direct PLUS Loan program is intensifying racial and ethnic wealth gaps.

EFC members – inspired by a set of guiding principles - work closely with families to help them make the best possible decision given their unique circumstances. Available estimates indicate that many students and their parents may find a lower-cost loan from a nonprofit organization a better option than a parent PLUS loan. EFC members counsel all individuals to exhaust their scholarship and grant aid and understand their rights and responsibilities before borrowing any education loan.

Background: EFC is the national trade association representing nonprofit and state-based higher education finance organizations that are dedicated to improving college access, success, and affordability in their states and nationwide. Learn more about EFC by visiting efc.org. 

CONTACT: Alex Ricci 
(202) 552-8500 
[email protected] 

SOURCE EDUCATION FINANCE COUNCIL