The U.S. government is sitting on a growing pile of debt backed by little more than parental love.
That’s because parents can borrow tens of thousands of dollars a year for their kids’ college education without showing they can pay it back. About 3 million parents have $71 billion in loans, contributing to more than $1.2 trillion in federal education debt. As of May 2014, half of the balance was in deferment, racking up interest at annual rates as high as 7.9 percent.
“It’s deeply problematic that the federal government is making relatively high-interest loans without thinking about, much less checking, whether the people they’re lending to will be crippled by this debt,” said Toby Merrill, a Harvard Law School lecturer who has counseled defaulted parents through the school’s Project on Predatory Student Lending. “We’re impoverishing the less-privileged population who are aging. That’s a terrible policy.”