Series: Is College Worth It? (Part 2 of 6)

Key Findings - Most college finance discussions focus on student debt alone. But families borrow as a unit — and when you add parent borrowing, the picture changes dramatically. - 400,000 families — 43% of Parent PLUS borrowers at median income — can't sustainably carry their debt. - At private nonprofits, 58% of families are underwater. -

Our analysis finds that Three-quarters of Parent PLUS borrowers at median income are in "high pressure" territory.

In Part 1, we showed that net price isn't what it seems. The same school can cost $5,000 for one family and $45,000 for another. Middle-income families often face the steepest climb — too wealthy for full aid, too cash-strapped to write a check.

But that raises a question: How do families actually cover the gap?

The answer, for nearly a million families a year, involves a conversation most ROI calculations never see: the ones that happens at kitchen tables, over Thanksgiving, between parents and grandparents and students trying to figure out how to make it work.

This is one of those conversations.

After high school, I didn't go to the University of Chicago. I joined the Army.

My recruiter showed me how I could get the Army to pay for tuition while I served. Over four and a half years of active duty, I completed about two years of my undergraduate degree — including seven online courses I took while deployed to Iraq in 2004 and 2005.

I didn't have a desk job. I was a scout. So before a mission, while everyone else watched movies to kill time, I was reading a textbook I'd ordered from Amazon. After the mission, when everyone else hit the gym to blow off steam or called their families back home, I'd huddle in the internet booths to write a paper or take a quiz.

That's more or less how I spent my sophomore year of college.

After I got out, I transferred to American University. I thought I had everything mapped out. But after my first semester, I got a surprise: my Pell Grant had been front-loaded, and I now had a funding gap of about $15,000 to fill — or I'd have to drop out.

I asked financial aid what I could do.

They asked if my parents could take out a loan.

Because my dad had finally succeeded in bankrupting my mom, the answer was no.

So I did what anyone would do in that situation. I begged my grandmother to co-sign on a high-interest loan from a major loan company.

I'll never forget being home during Thanksgiving, walking her through again and again how it would all work. Whether I was sure I'd be able to pay it back. She asked the questions any reasonable person would ask before putting their name on a $15,000 obligation for someone else's education.

Thankfully, she was both willing and able to sign. If she hadn't, I'd have dropped out. Gone back to work. Found some other way to make it happen.

I've never forgotten those conversations.

In a lot of ways, that's why I do this work.

My story is one version of a pattern playing out across nearly a million families every year.

The Debt PLU$ Project recently interviewed 66 families across nine institutions in their 2025 qualitative report.[^1] What they found echoes what I experienced:

"Families navigate in a fog — few understand the terms."

"PLUS loans are gap fillers — decisions made under pressure."

"Parents feel stretched thin."

These aren't financial decisions in any rational sense. They're relational ones. Parents say yes because that's what parents do. Grandmothers sign because they believe in you.

And it's not just Parent PLUS loans. A February 2025 NBER study using California credit records found that parents finance college through multiple channels: education loans, home equity lines, credit cards, personal loans.[^2] The mechanism varies. The pattern doesn't.

That same study confirmed what you might expect: lower-income families bear the heaviest burden. They borrow more for education, not less.

The Hidden Debt

When you read that a school has "low student debt," you're only seeing half the picture.

Often times people assume the loans students take out are in their own names, but that's not really true. Parents borrow too. And at many schools, parents who borrow take on significantly more than students who borrow.

Elite Privates and Flagships: The Family Reality

→ See full school debt profiles

At Brown, the median student borrower owes $10,000. The median parent borrower owes nearly $58,000.

These schools can truthfully say "average student debt under $20,000." What they don't advertise: among families who use Parent PLUS, the debt is three to six times higher.

And this isn't a few outliers. We analyzed 940,000 Parent PLUS borrowers across public and private nonprofit institutions. The pattern holds across sectors — and it's more pronounced at private nonprofits, including many schools celebrated for generous financial aid.

The full picture of what this means for families — whether they can actually afford these loans — is something we'll unpack. But first: who's taking on this debt?

Who's Taking On This Debt?

Sallie Mae's annual survey asks families directly how they pay for college — income, savings, borrowing, gifts. In 2025, parents reported covering 49% of costs.[^3]

NBER did a study recently which gives us another way to look at it. Instead of asking families, researchers linked the universe of federal aid applicants in California to credit records. That let them see what actually shows up in credit files — not just Parent PLUS, but all of it: education loans, home equity draws, credit cards, personal loans.

They used a natural experiment: students just above and below the GPA cutoff for California's Cal Grant program. Those who barely missed the cutoff faced higher prices. The researchers tracked what their parents did in response.

Lower-income parents didn't opt out. They took on more education debt — not less. And it wasn't just federal loans. When faced with higher prices, these parents borrowed more across the board.

Higher-income parents had more flexibility. Their total debt stayed flat, but the composition changed — more education loans, more home equity draws, less of other debt types. They restructured. Whether those trade-offs were marginal or consequential — a delayed kitchen renovation or a delayed retirement — credit data can't tell us.

At the end of the day, what the data does show: higher college prices led to increased parental delinquency overall. Families stretch. Some break.

The Scale

We've shown that parent debt is larger than advertised. But can families actually afford it?

To answer that, we need a framework. Not everyone can carry the same debt load. A $40,000 Parent PLUS loan means something very different to a family earning $50,000 than to one earning $150,000.

We use the Lumina Foundation's methodology for defining affordability.[^4] The key concept: discretionary income — what's left after covering basic needs.

Lumina defines the threshold as 200% of the federal poverty level. For a family of three, that's about $50,000. Anything below that goes to essentials. Anything above is discretionary — available for things like loan payments.

A family earning $50,000 has zero discretionary capacity for education debt. Any Parent PLUS loan at that income is, by definition, unsustainable.

We applied this framework to 940,000 Parent PLUS borrowers across public and private nonprofit institutions. For each income level, we asked: can the family sustain this debt?

The results:

At $80,000 — roughly the U.S. median household income — 43% of Parent PLUS borrowers are completely underwater. That's 400,000 families who cannot sustainably repay their loans.

The drop at $100,000 looks dramatic. But that's where discretionary income jumps from ~$30,000 to ~$50,000 — a 67% increase in capacity. Most Parent PLUS debt becomes manageable at that level.

Most, but not all.

The sector split at $100K:

At $100,000 family income, public school borrowers are essentially fine. Private nonprofit borrowers? Nearly one in four is still underwater.

The full sector picture at $80K:

Private nonprofits — including many schools celebrated for generous financial aid — have families underwater at nearly twice the rate of publics. And that gap persists even at higher incomes.

When It Falls to the Student

When parents can't carry the debt, it doesn't disappear. Someone absorbs it.

We call this overflow — the portion of Parent PLUS debt that exceeds what a parent can sustainably repay.

The Framework

We use a 10% threshold for sustainable debt payments. If loan payments consume more than 10% of a borrower's discretionary income — what's left after covering basic needs — they're in "high pressure" territory. We'll publish a full breakdown of our affordability framework in an upcoming post.

At $80,000 family income, parents have about $30,000 in discretionary income. At our 10% threshold, they can sustainably carry roughly $21,500 in total debt.

But the median Parent PLUS at Brown is $57,795. At Michigan, it's $40,000. The gap between what parents can carry and what they owe is the overflow.

Here's what that looks like at a handful of institutions:

If the student absorbs the overflow, we add it to their own debt. Then we test whether their post-graduation earnings can sustainably cover that combined burden — applying the same 10% threshold.

At Brown and Michigan, students graduate into high pressure territory — above the 10% threshold where payments strain the budget. Georgia Tech is borderline. And these are strong earners from flagship schools.

The National Picture

Now let's zoom out and look at what this looks like everywhere.

We applied this framework to 940,000 Parent PLUS borrowers across public and private nonprofit institutions. At each school, we calculated the overflow at $80K family income, added it to median student debt, and tested whether the combined burden was sustainable given graduate earnings.

Read the columns left to right:

Parents in High Pressure: Three-quarters of Parent PLUS borrowers at median income can't sustainably carry their debt. At private nonprofits, it's over 80%.

Student Can Absorb: For about a third of those families, the student's post-graduation earnings are strong enough to pick up the slack. The overflow is painful but manageable.

Neither Can Handle: For 400,000 families — 43% of all Parent PLUS borrowers at median income — neither the parent nor the student can sustainably carry the debt. At private nonprofits, that number is 58%.

This assumes, of course, that the student is perfectly willing and able to absorb this debt — and that the parent is perfectly willing to let them.

That's not what we see in practice.

Many parents don't pass the debt to their kids. They swallow it themselves.

A 2020 Student Borrower Protection Center survey found that nearly one-third of Parent PLUS borrowers over 50 showed signs of repayment distress — late payments, missed payments, requests to lower monthly amounts.[^5] These aren't parents making a strategic choice. They're parents stretching to make it work, often at the expense of their own retirement security.

The family is underwater either way. The only question is who goes under first — the student trying to launch a career while servicing debt they didn't sign for, or the parent approaching retirement with a loan balance that won't quit.

For 400,000 families at median income, neither can carry it. Someone drowns.

The Real Return on Investment Question

In Part 1, I talked about a conversation with my college counselor — the one where I asked whether college was "worth it".

It's important to note: I had yet to take a single economics, finance, or accounting class. I had no formal education telling me "this doesn't add up." Just the intuition of someone maybe smart enough to understand the concepts, who was also acutely feeling them on a day-to-day basis while he rode the buses up and down the city to load boxes off the back of a truck.

That intuition told me something was wrong. The numbers didn't feel right. But I didn't have the framework to say why.

Now I do.

I'm a college graduate. I believe in the value of higher education — not abstractly, but personally. College changed my life. It opened doors I didn't know existed.

And that's exactly why I'm saying this.

If we believe in the value of college, we owe it to the young people and families who don't have economics degrees — who are making these decisions in the fog — to be straightforward and earnest about what the data does and doesn't say.

The data doesn't say "don't go to college." It says: don't assume you can do whatever and it'll be fine.

Most conversations frame college as a student investment. Input: tuition. Output: earnings. If students break even on the median, the system works.

But families don't borrow as individuals. They borrow as a unit. And the outcomes don't cluster neatly around the median — they spread across a distribution. What happens at the 25th percentile matters just as much as what happens at the 50th.[^6]

My grandmother didn't calculate her break-even point. She asked whether she believed in me — and whether her signature might be the difference between finishing and dropping out. That's the calculation happening at kitchen tables across the country. Not risk-adjusted returns. Not net present value. Something more elemental: Can we make this work? What are we willing to sacrifice?

Student focused discourse ignores the grandmother who co-signed. It ignores the parent whose retirement account didn't grow because loan payments came first. It ignores the family that stretched — and sometimes broke — because they couldn't know, until the fog lifted, what the true cost would be.

The right question isn't whether the student comes out ahead. It's whether the family does.

And right now, for 400,000 families a year, the answer is no.

But here's the thing about "worth it" — it assumes the student finishes. It assumes they graduate into the earnings that justify the debt. It assumes the bet pays off.

What happens when it doesn't?

Next: The graduates who did everything right — and still can't make the math work.

Footnotes

[^1]: Burmicky, V., Odle, T., Wright-Kim, J., McFadden, M., & Carter, D. (2025). Debt PLU$ Project Qualitative Report. University of Michigan, University of Wisconsin-Madison, Howard University.

[^2]: Bhargava, P., Black, S. E., Denning, J. T., Fairlie, R. W., & Gurantz, O. (2025). "A Family Affair: The Effects of College on Parent and Student Finances." NBER Working Paper No. 33497. Uses California FAFSA data linked to credit records.

[^3]: Sallie Mae (2025). "How America Pays for College." Survey conducted with Ipsos. Families self-report how they finance college, including income, savings, and borrowing.

[^4]: Lumina Foundation. "College Affordability: What Is It and How Can We Measure It?" Uses 200% of federal poverty level as the threshold for discretionary income.

[^5]: Student Borrower Protection Center (2020). Survey of Parent PLUS borrowers. Nearly one-third of borrowers aged 50+ showed signs of repayment distress. https://protectborrowers.org

[^6]: It's worth noting that Parent PLUS borrowing rules are changing. Starting with the 2026-27 school year, new borrowers will face caps of $20,000 per year and $65,000 lifetime — the first hard limits after decades of unconstrained borrowing. But for families who've already started? The old rules still apply. We'll break this down in a later post.