ED Modifies Credit Criteria for PLUS Loans

The Department of Education (ED) added unpaid (with a balance greater than zero) collection accounts and charge-offs in their review of PLUS applicants’ credit history, effective with the COD release at the end of October.

Adverse credit history is defined in 685.200(c)(1)(vii)(B) to mean that as of the date of the credit report, the applicant—

  1. Is 90 or more days delinquent on any debt; or
  2. Has been the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a debt under title IV of the Act during the five years preceding the date of the credit report.

Unpaid collection accounts and charge-offs represent debt that is delinquent for 90 or more days, so they fall under that category in the regulatory definition.

In response to NASFAA's inquiry, ED will be issuing an Electronic Announcement in the near future that officially notifies schools of this change.


Publication Date: 12/9/2011

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