As parents struggle to find ways to help pay for their children’s college, a federal parents-only loan program has ballooned in the last decade.

In 2011-12, the most recent year for which data are available, 20 percent of students reported using Parent PLUS loans to pay for college, according to the U.S. Department of Education.

That’s a 400 percent increase since 1989-90, when only 4 percent of students used the loan.

Unlike federal direct student loans, which limit borrowing to $31,000 for dependent undergraduates and $138,500 for graduate students, there is no limit on how much parents can borrow through Parent PLUS loans, which are intended to be a last-ditch option that fills the gap between all other aid and the total cost.

Schools use the Free Application for Federal Student Aid, or FAFSA, to calculate the expected family contribution, commonly known as EFC.

The EFC does not necessarily represent what a family actually can afford to contribute, but schools use it to determine how much financial aid to provide each student.

It generally works out to about 15 percent of the family’s annual gross income, plus 5 percent of its non-retirement assets, plus 30 percent of any savings in the student’s name. For example, a family that earns $75,000 a year, has $50,000 in non-retirement assets and a $5,000 college savings account for the student would have an EFC of $15,250 per year.

On average, parents pay about $7,793 a year toward their child’s college costs, according to a survey by Sallie Mae.

But parents can find they simply don’t have the money.

The government issued almost $10 billion in Parent PLUS loans in 2013-14, up 26 percent from 10 years earlier, according to the College Board.

That $10 billion is about 10 percent of all federal student loans issued that year.

It has become so common that some schools include the expected PLUS loan amount in their financial aid letters. Intended to make college affordable to all, the loans have drawn criticism because they are easy to get and there is no mechanism to ensure that borrowers have the ability to repay.

“PLUS loans can be easier to get than private loans, but parents can find themselves over their heads if they don’t monitor their borrowing carefully,” said Bill Smith, who runs a Portland-based company advising students and parents on college financial aid. “It’s tricky because there are a lot of variables. PLUS or private loans can make college achievable, but people should go into them with their eyes open. Unfortunately a lot of borrowers don’t fully consider all the costs and implications.”

Not only are more parents using PLUS loans, but they are borrowing larger amounts of money. The average amount borrowed has jumped 211 percent, to $27,700 in 2011-12, from $8,900 in 1989-90, in inflation-adjusted figures.

Most worrisome is a near tripling of the default rate for PLUS loans three years after borrowing the funds. In 2013, 5.1 percent of 2010 borrowers were in default, compared to a 1.8 percent default rate for 2006 borrowers.

Like federal student loan debt, these loans cannot be discharged in bankruptcy.

Noel K. Gallagher can be contacted at 791-6387 or at:

[email protected]