Chicago Universities Accused of Pushing Low-Income Families into Debt with Parent PLUS Loans

Report alleges Loyola and DePaul may be favoring wealthier students with merit-based aid, leaving lower-income families to rely on high-interest federal loans.

Published on Feb. 20, 2026

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A new report from the think tank New America has raised concerns about financial aid practices at Loyola University Chicago and DePaul University. The report alleges these institutions, along with dozens of others nationwide, may be strategically offering merit-based scholarships to wealthier students, creating larger financial aid gaps for lower-income students who then rely heavily on high-interest Parent PLUS loans to cover tuition costs.

Why it matters

The report highlights the potential for financial hardship faced by lower-income families as the pause on federal student loan payments implemented during the COVID-19 pandemic comes to an end. There are concerns this could lead to increased defaults and wage garnishments, further burdening vulnerable populations.

The details

The report found that at DePaul, 53% of students whose parents took out Parent PLUS loans were also Pell Grant recipients (students from low-income backgrounds), with parents borrowing an average of $33,000. At Loyola, 48% of Parent PLUS loan borrowers were Pell Grant recipients, with an average debt of approximately $46,000.

  • The report was published on February 18, 2026.

The players

New America

A progressive think tank that authored the report on financial aid practices at Loyola University Chicago and DePaul University.

Loyola University Chicago

A private Jesuit university in Chicago that is alleged to have offered merit-based scholarships to wealthier students, creating larger financial aid gaps for lower-income students.

DePaul University

A private Catholic university in Chicago that is alleged to have offered merit-based scholarships to wealthier students, creating larger financial aid gaps for lower-income students.

Steven Burd

The author of the New America report who emphasizes the potential for financial hardship faced by lower-income families due to the universities' financial aid practices.

Pell Grant

A federal grant awarded to undergraduate students with exceptional financial need.

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What they’re saying

“What's really concerning is that they're putting these families in real financial trouble, in true financial vulnerability.”

— Steven Burd, Report Author (New America)

“We provide scholarships, grants and information about loan options, but ultimately families decide how much to borrow.”

— DePaul University Officials (newsy-today.com)

“We proactively work with students and families to present all available options, without directing families toward any specific choice.”

— Loyola University Representatives (newsy-today.com)

What’s next

The Trump administration is preparing to resume wage garnishments for those in default on federal student loans as the pause implemented during the COVID-19 pandemic comes to an end, potentially exacerbating the financial hardship faced by lower-income families.

The takeaway

This report highlights the need for greater transparency and accountability in how universities allocate financial aid, as well as potential legislative action to address the underlying issues around the use of Parent PLUS loans and the burden they place on vulnerable families.