Forty-one universities are facing scrutiny following the release of a new report alleging they actively steer low-income students toward Parent PLUS loans, a federal loan program often carrying higher risk, while simultaneously offering more generous financial aid packages to wealthier applicants. The report, published Thursday by New America, a left-leaning think tank, identifies a pattern of “financial aid leveraging” designed to maximize enrollment revenue.
The practice involves offering limited financial aid to Pell Grant-eligible students – those from the lowest income brackets – effectively pushing them toward Parent PLUS loans to cover the remaining cost of attendance. These loans are taken out by parents, not students, but still accrue interest and require repayment. According to the report’s author, Stephen Burd, this strategy allows institutions to “determine the precise price points at which these institutions can enroll different groups of students without spending a dollar more than is necessary.”
The University of Alabama at Birmingham topped the list of institutions identified in the report, with 64 percent of its Parent PLUS loan borrowers also receiving Pell Grants. Other universities named include Temple University, George Mason University, and Kent State University. At all institutions listed, at least one-third of Parent PLUS loan borrowers were Pell Grant recipients, and the average net price for the lowest-income students was at least $12,000 annually.
Burd’s analysis, based on public records from over 300 colleges, comes after a 2021 Wall Street Journal investigation uncovered similar practices at Baylor University, where the median Parent PLUS loan taken out by low-income families was $44,000 – exceeding some families’ annual income. Baylor has since introduced a tuition and fee waiver for families earning less than $50,000 per year, though the program does not cover room and board.
The findings arrive as a new federal law, the One Big Beautiful Bill Act, enacted in December 2025, places caps on Parent PLUS loans at $20,000 annually and $65,000 total per student. However, Burd argues the caps are insufficient, stating the legislation also removed a crucial safety net: the ability for parents to consolidate their PLUS loans and repay them as a percentage of their income through the Income-Contingent Repayment Program. “While the policy is well intentioned, it is unlikely to be anything but minimally helpful for low-income families who cannot afford to take on any Parent PLUS loans,” the report states.
Peter Granville, a fellow at the Century Foundation specializing in college affordability, lauded the report as “fantastic” and called for accountability from state and local leaders. “College presidents have felt like they can sell parents on risky loans to fill affordability gaps that the college could have filled with grants,” he said. “It’s important to name names and spell out the harm they’ve done.”
Several universities responded to the report’s findings. Kent State University highlighted its Flashes Go Further scholarship program, launched in 2021, which covers full tuition and fees for families earning under $75,000. The University of Alabama defended its scholarship offerings, stating it provides “generous scholarships, including a range of both merit- and need-based aid” and that the decision to take on financial aid ultimately rests with the student and their family. Quinnipiac University denied encouraging students to take on unsustainable debt, while St. John’s University emphasized its need-blind admissions process and stackable financial aid options. Drexel University and the College of Charleston both stated they do not recommend Parent PLUS loans in their aid letters.
The report is the second in a planned three-part series examining financial aid leveraging. The final report will focus on potential solutions to address the issue and improve college accessibility and affordability for low- and lower-middle-income students and families.
