DePaul and Loyola Chicago Accused of Predatory Parent PLUS Loans to Low-Income Families

🎓 The Recent Accusations Against DePaul and Loyola Chicago

In a striking development in higher education finance, DePaul University and Loyola University Chicago have been named in a national report highlighting practices that allegedly steer low-income families into substantial debt through federal Parent PLUS loans. Released in early 2026 by the think tank New America, the report spotlights 41 colleges and universities across the country for what it describes as favoring wealthier students with generous scholarships while leaving lower-income households to shoulder unaffordable borrowing. For families in Chicago, where access to quality education is a key aspiration amid economic challenges, this news raises critical questions about equity in college affordability.

The core issue revolves around Parent PLUS loans, a federal program allowing parents to borrow up to the full cost of attendance minus other aid. Unlike standard student loans with borrowing caps, these loans have no aggregate limit, high fixed interest rates around 8.94% for loans disbursed in 2025-2026, and origination fees of about 4.23%. While designed originally for middle- and upper-income families attending elite schools, critics argue they have become a tool for institutions to bridge financial aid gaps without committing their own resources.

At DePaul, 53% of students whose parents took out Parent PLUS loans were recipients of Pell Grants, indicators of family income typically below $30,000 annually, with those parents borrowing an average of $33,000. Loyola Chicago shows a similar pattern, with 48% of such borrowers being Pell parents averaging $46,000 in loans. Cumulatively, DePaul's Parent PLUS volume exceeds $957 million, and Loyola's nears $929 million, underscoring the scale of reliance on this debt type.

Understanding Parent PLUS Loans and Their Hidden Risks

Parent PLUS loans, formally Federal Direct PLUS Loans for parents, enable biological or adoptive parents of dependent undergraduates to cover education costs not met by grants, scholarships, or student loans. Eligibility hinges on a credit check—no adverse history—and general federal aid requirements, but approval rates exceed 75%, making them accessible even to those with moderate credit profiles. Repayment begins immediately but can be deferred while the student is enrolled at least half-time, with interest accruing and potentially capitalizing, ballooning the balance.

For low-income families, the risks are profound. Average net prices at DePaul for households under $30,000 hover around $24,000 annually, while Loyola's is approximately $29,000. Borrowing $33,000-$46,000 often exceeds yearly earnings, leading to long-term financial strain. Unlike student loans, parents cannot transfer debt to graduates, and income-driven repayment requires consolidation into other plans, which may not suffice for minimum-wage earners post-graduation.

Universities like DePaul and Loyola promote these loans on their financial aid pages, outlining application steps via studentaid.gov and noting deferment options, but without emphatic cautions on long-term affordability. DePaul emphasizes family choice in borrowing, providing over $350 million yearly in scholarships and grants, while Loyola highlights PLUS as cheaper than private alternatives with flexible repayment.

• High interest (8.94%) compounds during deferment.
• Fees reduce disbursed amounts upfront.
• No school accountability for defaults—government pursues via wage garnishment.
• Limited forgiveness paths, mainly Public Service Loan Forgiveness after 120 payments.

📊 Inside the New America Report: Methodology and Broader Findings

New America's analysis, authored by Steven Burd, examined over 300 selective institutions with endowments above a threshold, excluding HBCUs due to chronic underfunding and art schools for high baseline costs. Schools qualified if at least one-third of Parent PLUS borrowers were parents of Pell recipients and median borrowing reached $15,000. Across the 41 flagged, Pell parents comprised 45% of borrowers, with median debt at $29,102.

In 2023, these institutions allocated $2.4 billion—nearly 40% of aid—to students from families deemed able to pay full freight, squeezing need-based support. Merit scholarships to high-achievers from affluent backgrounds consume budgets, forcing low-income admits into loans. Burd warns this 'predatory inclusion' boosts enrollment metrics and rankings but jeopardizes families, potentially inviting worse private lending if reforms lag.

Chicago's context amplifies concerns: With tuition at DePaul around $43,000 and Loyola similar, post-pandemic inflation and stagnant wages hit urban low-income households hard. The report urges transparency in aid packaging and caps beyond proposed $65,000 per child, which Burd deems insufficient.

University Perspectives: DePaul and Loyola's Stance

DePaul officials assert commitment to affordability, distributing substantial institutional aid and counseling families on options without mandating PLUS loans. 'Families make the decision to proceed with loans as they see fit,' a spokesperson noted, highlighting $350 million in annual support from endowments and donors.

Loyola deferred comment pending review but positions PLUS as superior to payment plans or retirement dips, offering deferment and tax-deductible interest up to $2,500 yearly. Both schools note rising operational costs, including recent layoffs at DePaul amid enrollment dips, strain aid budgets further.

Critics counter that aid formulas prioritize revenue-generating students—those likely to donate post-graduation—over equity, a nationwide trend where commuter schools evolve into ranking-chasers at families' expense.

💸 Real Impacts on Low-Income Chicago Families

Consider a South Side family earning $28,000 sending a child to DePaul. After Pell Grants ($7,395 max in 2026) and modest institutional aid, a $24,000 net price gap prompts $30,000+ PLUS borrowing over four years. Interest accrues at 8.94%, fees nibble 4%, and post-graduation payments strain budgets amid Chicago's 12% child poverty rate.

Defaults hit Black and Latino borrowers hardest, exacerbating wealth gaps. Nationally, Parent PLUS delinquencies exceed 20%, with wage garnishment resuming post-COVID. Graduates burdened indirectly delay milestones like homeownership or starting families.

• Debt-to-income ratios often surpass 20%, risking foreclosure.
• Parental stress impacts student mental health and retention.
• Chicago's segregated neighborhoods limit aid awareness.

Solutions and Reforms: Path Forward for Families and Policymakers

Experts advocate need-blind admissions, aid transparency, and PLUS underwriting reforms mirroring private loans. Families can mitigate risks:

• Use net price calculators on school sites for realistic estimates.
• Prioritize community colleges or in-state publics like UIC for transfers.
• Appeal aid packages with updated finances.
• Explore scholarships via AcademicJobs.com scholarships.

Legislation like borrower caps and school accountability metrics gains traction. Meanwhile, platforms like Rate My Professor empower informed choices.

For prospective students, balancing dreams with finances means auditing aid holistically. Read the full Chicago Sun-Times coverage or U.S. Department of Education on Parent PLUS.

Navigating Higher Education in Chicago: Resources and Next Steps

Beyond scrutiny, Chicago boasts vibrant options from community colleges to top research universities. Aspiring academics can find opportunities in higher ed jobs, faculty positions, or administration via AcademicJobs.com. Share experiences on Rate My Professor, explore university jobs, or post openings at recruitment services.

Whether rating courses, checking professor salaries, or seeking career advice, informed decisions foster equity. Have your say in the comments—your insights aid fellow seekers.