More than 3 million parents took on student-loan debt to give their kids a shot at higher education — and it can bury them in huge monthly bills they never anticipated

• Parent PLUS loans are the most expensive type of federal loan with the highest interest rate.
• Millions of parents take them out and get buried in debt because there is no limit on borrowing.
• Experts say policy should ensure parents can afford the debt they want to take on at the outset.

Danet Henry, 53, knew she would do everything she could to make sure her two daughters could get an education, and she has a $49,000 student-debt load for her oldest daughter to show for it.

When her youngest daughter graduates college in three years, she estimates her debt balance will double.

That's because she made use of parent PLUS loans — a type of federal loan for parents that covers the full cost of attendance minus any financial aid the child already received. For Henry, the loans sounded like a good deal at the outset. She could take out as much as she needed to ensure her daughters wouldn't be held back just because she could not afford to pay college costs out of pocket. The plan was that once they graduated, she could manage the monthly payments from there.

But after four years taking out loans, her perspective has shifted, and while she told Insider they were "the only way for my kids to get an education and be successful," she has no idea how she will afford to pay them off.

"I most definitely will not be able to make those payments," Henry said.

Henry's situation isn't uncommon. PLUS loans have the highest interest rate of all federal loans, at 6.28%, which can cause debt loads to surge, especially if the borrower falls behind on payments. In addition, PLUS loans don't come with a borrowing limit, and lenders don't check a borrowers' income. According to Urban Institute researchers Kristin Blagg and Jason Cohn, the volume of parents borrowing PLUS loans doubled from 2009 to 2019.

'Parents aren't necessarily receiving that benefit of a college education'

When students take out federal loans to pay for their own education, the intent is that once they graduate, they will become employed and make sufficient income to pay off that debt. But it's different for parents. As Blagg explained to Insider, parent PLUS loans were initially intended for parents who had a lot of assets that couldn't be immediately accessed at the time their kids were going to college.

"The theory of parent loans was that you have this wealth or collateral, and we'll give you a loan to allow you to pay off your college tuition over time," Blagg said. But in practice, federal lenders don't require parents to have a certain income, wealth, or collateral to borrow the funds. "What has happened more broadly is that parent PLUS loans have become another way for colleges to extend the amount of debt that people can take on."

Parents also don't have the same access to income-driven repayment plans that students do, and since they are likely at a different place financially and career-wise than a recent college graduate, potential for increased earnings is probably low — especially if PLUS loans were required in the first place because they could not afford tuition and cost of attendance.

"We think about student loans as, we're giving you money to invest with the thought that you're going to increase your earnings potential over time and you're going to be able to pay back that loan," Blagg said. "But the math for parents, particularly if they're really unable to pay the college tuition and other costs at the moment their child is going to school, that math doesn't quite work out because the parents aren't necessarily receiving that benefit of a college education."

Over 3 million parents have taken on debt to pay for their kids' education

Insider previously reported 3.6 million parents have taken out $103.6 billion in loans, according to federal 2021 data, with the average initial balance standing at nearly $29,000. Some have been paying off loans for decades, but their balance has only grown due to surging interest rates, and they don't see the monthly bills stopping anytime soon.

Jeff O'Kelley, for example, previously told Insider he has a $104,000 student-debt load for his son and still has 360 monthly payments to go — each payment about $760 — meaning he will be 88 years old when he finishes paying off his debt, "that is, if I live that long," he said.

Robert Pemberton, a 64-year-old dad with $265,000 in student debt for his two kids, is delaying his retirement to pay off the loans. He said he wishes he could stop working as he gets older, but he can't afford to do so.

"This is an endless cycle where the loan can never be paid off unless I have a windfall and pay it all or I die and it goes away," Pemberton said. "I don't know if I'll be able to work into my 80s."

A 2019 report from Urban Institute suggested a range of policy changes to help parents taking on debt to send their kids to college, like limiting the amount parents can borrow based on income, and measuring default rates on the loans to ensure low-income borrowers don't take on more than they can afford.

But until those changes are implemented, many parents like Henry will continue to be weighed down by debt they can't afford.

"It puts a lot of pressure on a parent," she said.