Options Following a Grad PLUS Denial
The Graduate PLUS Loan, unlike other federal educational loans taken by students, is credit-based. The credit review is not looking at income-to-debt ratios but instead heavily emphasizes the borrower's debt payment history. Sometimes, unfortunately, the borrower's financial history does not produce an approval and therefore limits access to the Grad PLUS Loan.
You can attempt to secure funding through one of the options detailed below, even though you have received a PLUS denial. Please alert the Student Financial Aid Office after you receive an approval due to successful credit appeal or approved endorser. Without notice, the denied Federal Graduate PLUS Loans will be canceled within one week and removed from the award offer.
Seek a Credit Appeal
The Department of Education allows borrowers whose credit was denied the opportunity to document either of the following situations.
- Information showing that credit reporting used in the credit denial is incorrect and/or has been corrected.
- Extenuating circumstances exist relating to the adverse credit history of the primary PLUS borrower.
Borrowers make a credit appeal through one of these means.
- Log in to the Federal Student Aid website 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 the borrower with further instructions.
- Contact Applicant Services at 1-800-557-7394 between 8a to 11p EST, Monday through Friday.
Whenever a borrower is appealing credit, please alert Student Financial Aid so the PLUS Loan is not canceled during the appeal process.
Utilize an Endorser
An endorser is someone who will pass the credit check and who agrees, similar to a co-signer, to repay the PLUS Loan if the student borrower is unable to do so. Almost anyone can serve as an endorser.
If you choose to obtain an endorser, the endorser should complete the endorser addendum at the Federal Student Aid website. The endorser will need the PLUS Endorser Code (if a Direct PLUS Loan Request was completed) or Loan Identification Number to connect the endorsement to the denied Grad PLUS Loan. Completing the endorsement online also requires a Federal Student Aid ID (FSA ID) that utilizes a username and password.
- If the borrower completed the Direct PLUS Loan Application, the PLUS Endorser Code is found in the confirmation email received in the denial notice or by logging into the Federal Student Aid website and selecting "Direct PLUS Loan Requests."
- More often, the Federal Direct Graduate PLUS Loan was initiated by accepting the loan as part of a financial aid offer. In this case, the Loan/Award Identification Number will be needed and can be obtained by contacting One Stop (513-556-1000).
- If the endorser does not already have an FSA ID, they may create one.
Master promissory notes (MPNs) are used for PLUS Loans and allow for multiple year borrowing under the same terms. However, when an endorser is used, the terms of the MPN used for that loan is specific only to that loan. Therefore, a borrower who has previously received a PLUS Loan without an endorser will need to complete a unique MPN for the endorsed loan. Also, any additional PLUS borrowing will require a new MPN and endorser addendum (though the same endorser can be used).
Inform Student Financial Aid whenever the borrower is seeking or using an endorser so that the loan is not canceled in the meantime.
NOTE: It is key that the endorser addendum, PLUS Loan, and award offer amounts all match exactly.
Borrowers who are seeking to replace the denied PLUS Loan through one of the options noted may not be able to do so at the dollar amount originally offered or desired. Graduate students may have to seek additional means to address the bill outside of the final aid package.
Of course, student loans increase indebtedness. Whenever possible, students should consider how they can reduce their reliance on loan funds through increased income, adjustment of priorities, or reduced expenses.