Federal Grad PLUS Credit Review, Denial & Remediation Options

CREDIT REVIEW

A credit review is performed by the Department of Education when the Financial Aid Office submits a Grad PLUS loan origination record to the loan processor.  For a credit check to be performed, students (and/or an endorser, if applicable) must lift or remove any security freeze they have placed on their credit record.

As part of the enrollment planning process, students are strongly encouraged to review their credit history to ensure good standing and that it contains no errors.  Individuals may obtain a credit report through www.annualcreditreport.com. Report any errors to each credit bureau and continue to use credit wisely.

The loan processor may use any one of the three main credit bureaus, which include Equifax, Experian, and TransUnion . The Federal Trade Commission (FTC) is a great resource to learn about credit reports, consumer rights, and how to request a free credit report under the Fair Credit Reporting Act. Visit https://consumer.ftc.gov/articles/free-credit-reports.

The school and the student will be notified by the loan processor if a loan is not approved as a result of an adverse credit history.  While loan denial is a serious concern, many students are able to remediate credit denials.

What is adverse credit for Grad PLUS consideration? https://studentaid.gov/help-center/answers/article/what-is-adverse-credit-history

The steps necessary to reconcile a loan denial will be communicated to the student from the Department of Education and are also outlined below. The most up-to-date instructions are available on the Federal Student Aid website.

OPTION 1: Credit Appeal

If an error existed in the applicant’s credit report or there are extenuating circumstances related to the adverse credit, an appeal may be submitted to the loan processor. The appeal process requires the submission of additional documentation, which may include the following.

• Documentation that the credit report included incorrect information or that the adverse information has been corrected.
• Documentation of the extenuating circumstances related to the adverse credit item(s).

Borrowers may submit an appeal online or may initiate the appeal by contacting the Student Loan Support Center.

• Log in to www.studentaid.gov and select “Document Extenuating Circumstances” on the left navigation bar. Follow the directions and a representative from the Department of Education’s Applicant Services will contact you with further instructions.
• Contact the Student Loan Support Center at 1-800-557-7394 between 8am to 8pm, Monday through Friday. During the automated introductory message, please dial “3” for more information about appealing the credit decision.

Visit https://studentaid.gov/articles/plus-loans-denied-adverse-credit/ & https://studentaid.gov/appeal-credit/demo for more information.

OPTION 2: Add Endorser

An endorser is someone who agrees to repay a loan if the borrower does not repay it. The endorser must be 18 years of age or older, a U.S. Citizen or Permanent Resident and may not have an adverse credit history.

If you choose to obtain an endorser:

• The endorser must complete the endorser addendum online. Please visit https://studentaid.gov/myDirectLoan/whatYouNeed.action?page=endorser for additional information.
• The endorser will need to login at www.studentaid.gov with a Federal Student Aid ID. If the endorser does not already have an FSA ID, they may obtain one at https://fsaid.ed.gov.

Additional Grad PLUS borrowing will require a new Master Promissory Note (MPN) and endorser addendum. The same individual may endorse an additional loan.

ADDITIONAL CREDIT COUNSELING

In addition to pursuing one of the above credit remediation options, an applicant who has appealed or added an endorser must complete an additional loan counseling requirement (PLUS Credit Counseling). PLUS Credit Counseling is different than Federal Direct Loan Entrance Counseling which is required of all first-time borrowers. PLUS Credit Counseling is often an overlooked requirement for those who have appealed or added an endorser. The school cannot disburse the Grad PLUS loan until we receive confirmation from the processor that PLUS Credit Counseling has been completed. The school will receive the results electronically when the requirement has been met.