Options Following a Parent PLUS Denial
The Parent PLUS Loan, unlike other federal educational loans, 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 Parent PLUS Loan.
Even with a PLUS denial, you can attempt to secure funding through one of the options detailed below. Please alert the Student Financial Aid Office if you wish to pursue one of these options. Without notice, the Federal Parent PLUS Loans will be canceled within one week of us being informed of the denial and removed from the award offer.
Utilize Another Parent Borrower
The "parent" in Federal Direct Parent PLUS Loan references a biological or adoptive parent or a step-parent listed on the FAFSA. Therefore, some students can elect to have another PLUS applicant pursue the loan.
Any other qualifying parent or step-parent willing to apply for the PLUS Loan may do so. They can complete the online PLUS Loan process to include the application and Master Promissory Note. When completed and approved, contact One Stop (513-556-1000) to request the new parent be listed as the PLUS borrower. UC will re-process the PLUS Loan for the new borrowing parent.
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 into the Federal Student Aid website and select "Parent" tab and then "Appeal a Credit Decision." 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.
If the borrower is initially denied and approved via this appeal process, the borrower will also need to complete the Parent PLUS counseling requirement before the PLUS Loan can be disbursed. This counseling is a review of loan and repayment obligations.
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 borrower is unable to do so. Almost anyone can serve as an endorser. However, the student cannot serve as an endorser for their parent.
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 PLUS Loan. Completing the endorsement online also requires the endorser to create a Federal Student Aid ID (username and password) if they do not already have one.
- 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 "Apply for a Parent PLUS Loan."
- If the endorser does not already have an FSA ID (username and password), they may obtain 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).
Finally, when the borrower is initially denied and approved through use of an endorser, the borrower will need to complete the Parent PLUS counseling requirement before the PLUS Loan can be disbursed. This counseling is a review of loan and repayment obligations available at the Federal Student Aid website.
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.
Pursue Additional Student Unsubsidized Loan
In cases of a parent credit denial or when an eligible endorser is not available, the student can be considered independent for loan purposes only. As such, eligibility for the Federal Direct Unsubsidized Loan increases. This additional student borrowing will likely be less than the PLUS but can assist the student in meeting educational costs.
Freshmen and sophomores are eligible for an increase of up to $4,000 based on cost of education and other aid. Juniors and seniors can get up to an additional $5,000. This increase is not available if any parent passes the credit check or an endorser is approved through the PLUS credit check process.
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. Families may have to seek additional means to address the bill outside of the final aid package.
Of course, parent and student loans increase the borrower's indebtedness. Whenever possible, borrowers should consider how they can reduce their reliance on loan funds through increased income, adjustment of priorities, or reduced expenses.