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Latest from FSA: Plans to Strengthen PLUS Loan Program

August 31, 2014

Recently, the U.S. Department of Education proposed new regulations that will revise eligibility standards and improve access for student and parent borrowers under the federal Direct PLUS loan program. While developing the updated standards, the Department collected feedback and suggestions from students, families, and partner organizations. These proposed changes included:

  • An updated definition of adverse credit history
  • Required PLUS loan counseling for approved borrowers with an adverse credit history
  • Clearly stating the adverse credit history eligibility standards for potential borrowers
  • Defining terms such as “charged off” and “in collection” to more accurately determine if an applicant has an adverse credit history
  • Minimizing the time period a borrower’s credit history is reviewed from the last five years to the last two years for charge offs and collections to determine adverse credit history
  • Authorizing the Secretary to adjust the combined outstanding balance adverse debt threshold of $2,085 as necessary
  • Allowing denied PLUS loan applicants the opportunity to provide documentation that can be used for the Department’s reconsideration and require PLUS loan counseling for applicants who are granted loans under extenuating circumstance prior to loan disbursement

The Department’s final rules will be published by November 1st. This would allow borrowers to take out a PLUS loan under the new changes for the 2015-2016 school year. Borrowers who were denied for a PLUS loan under the current rules can still continue to apply for reconsideration. Additionally, the Department is considering implementing final regulations before the 2015-2016 school year so that borrowers can benefit sooner.

To read the full article, visit: http://www.ed.gov/news/press-releases/us-department-education-strengthens-federal-direct-plus-loan-program.

 

Megan Freese, Communications Intern

Megan Freese, Communications Intern

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