Parents who took on student loans for their kids are facing 'a grim reality' as payments resume because they're not included in Biden's new plan to make monthly bills cheaper, the NAACP says

• Student-loan borrowers with parent PLUS loans are not included in Biden's new SAVE plan.
• The NAACP urged the Education Department to make those borrowers eligible.

The NAACP wants to ensure parents who took on student debt for their children are included in President Joe Biden's latest relief efforts.

On Wednesday, NAACP President Derrick Johnson and National Youth Director Wisdom Cole sent a letter to Education Secretary Miguel Cardona regarding borrowers who took on parent PLUS loans — a type of federal loan a parent can take on to pay for up to the full cost of attendance for their child's education.

The issue they raised is that parent PLUS borrowers are not eligible for Biden's new SAVE income-driven repayment plan, which is intended to make monthly payments cheaper for many borrowers. While those borrowers can still access income-contingent repayment plans, they do not include the same benefits as SAVE, like limiting interest capitalization and shortening the timeframe for relief.

"Parent PLUS borrowers face a grim reality as loan repayments restart," Johnson and Cole said. "The new SAVE plan does not apply to Parent PLUS borrowers, and there is currently no plan to assist such borrowers when loans restart."

They said that they're asking the administration "to provide student loan debt relief to millions of borrowers by using existing authority to fully extend all income-driven repayment plans to Parent PLUS borrowers."

Pandemic relief for all federal borrowers is over — interest began accruing on borrowers' balances in September, and bills are now starting to become due. While parent PLUS borrowers can make use of the 12-month "on-ramp" period during which missed payments will not be reported to credit agencies, their exclusion from the SAVE plan is yet another example of how burdensome PLUS loans can be.

Currently, over 3 million parents hold $104 billion in PLUS loans, and they come with the highest interest rate of all federal loans: 8.05% for the 2023-2024 school year. These loans are risky because they do not consider a parent's ability to repay their loans, meaning they could borrow as much as they need to and find themselves stuck with unaffordable debt for years to come.

One parent, for example, previously told Insider he's still paying a $265,000 student debt load for his two kids after 16 years. "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. I don't know if I'll be able to work into my 80s," he said.

A senior administration official told reporters back in January that the Higher Education Act of 1965 does not allow parent PLUS loans to be repaid on an IDR plan, and at the time, the Education Department was not proposing changing that law. It's unclear if any changes will be made going forward, but Johnson and Cole warned that without the relief, defaults could surge for Black borrowers, bringing "disastrous consequences for the Black community and the American economy."