When Freddie Ramos’s kids were still in elementary school, he took them to eat lunch at colleges across Illinois. He wanted Freddie Jr. and Gabriel to understand the importance of higher education and help them feel they belonged on campus.
So when it came time for them to go to college, the Chicago resident felt an obligation to help pay for their degrees.
“It wasn’t a vision that I gave to them and turned around and walked away,” said Ramos, 63. “It was a vision we shared together.”
To help finance the last year of college for their son in 2018, Ramos and his wife took out more than $20,000 in PLUS loans — a form of federal student debt that parents can tap on behalf of children in undergraduate programs.
More than 3.7 million American families owe approximately $104 billion of this type of debt, according to the nonprofit Century Foundation. These borrowers, like millions of others across the country, didn’t have to pay down their debt for the past three years because of a coronavirus pandemic-era payment pause.
But that ends this month.
And Ramos still has $12,500 left to pay.
PLUS loans offer a way for parents to fill the gap when other financial aid doesn’t cover all of a student’s expenses. But they are riskier and more burdensome than other federal undergraduate loans, especially for parents of color, advocates say.
Parent PLUS loans have higher interest rates and virtually no limits on the amount that can be borrowed. And they aren’t eligible for many of the relief plans other borrowers can turn to, including the new federal SAVE plan. These plans adjust monthly payments based on a borrower’s income. And they promise cancellation after a set minimum number of payments are made.
There’s a loophole that Parent PLUS borrowers can use to get onto one of these plans. But it’s complicated, and it’s closing in July 2025. The multistep process is sometimes referred to as “double consolidation.”
Borrowers should be aware this backdoor option isn’t publicized by loan servicers or the federal Department of Education, which plans to shut it down next summer.
Despite these drawbacks and the barriers to relief, more Black and Latino parents with fewer resources are leaning on PLUS loans to send kids to college, according to the Century Foundation. That’s in part because Pell grants for students from low-income families aren’t keeping up with rising costs. And families of color are less likely than white families to have the family wealth needed to afford the increased cost of higher education.
“PLUS borrowing by Black parents is especially concerning because Black parents are borrowing outsized amounts relative to their incomes and assets and struggling with repayment, especially in retirement,” The Education Trust, a Washington advocacy group, said in a recent report.
Ramos, who is Mexican American, isn’t on any kind of income-adjusted payment plan. After retiring from his first career as an electrical engineer in 2017, he started working for nonprofits near Belmont Cragin, his Northwest Side neighborhood.
“I said, ‘Well, let me keep working, I’ve got kids in school,’ ” said Ramos, now a program lead for Metropolitan Family Services on the Northwest Side. “So there was a short period there that I was a little stressed out because I was looking for work.”
Ramos said he’d managed to help cover his sons’ college bills by dipping into his retirement savings. Then, in 2018, for the last year of college for his older son, that wasn’t an option. So he and his wife turned to PLUS loans.
Ramos and his wife, an accountant, had paid off about $8,000 of those loans before the pandemic. The three-year payment pause allowed them to afford home repairs including a new roof. Now that the pause is over, they’re tightening their budget, cutting back on expenses to pay off the remaining $12,500.
“We’re thinking about clothes,” Ramos said. “You don’t have to have the latest fashion. We’re old already.”
Ramos was more than willing to make sacrifices to repay the debt that helped his sons get through college. They’ve both graduated. Freddie Jr. is a data analyst, and Gabriel works in physical therapy.
Ramos said their degrees are among the few things in life that can’t be taken away.
“To get invited to the table, you have to have that piece of paper,” he said. “That’s just how it is. And I made that clear to them, ‘You need that paper. That’s the only way you’re gonna get invited to the table, to a job, to an interview or whatever.’ ”
