Direct PLUS Loans From A to Z. U.S. Department of Education Federal Student Aid

Transcription

1 Direct PLUS Loans From A to Z U.S. Department of Education Federal Student Aid

2 Wood Mason Federal Student Aid Atlanta, GA

3 AGENDA Federal Direct PLUS Loan basics Federal Direct PLUS Loan eligibility School Borrower Master Promissory Note (MPN) Credit Check Entrance Counseling Processing Federal Direct PLUS Loan data Originating Disbursing Repayment 3

4 Federal Direct PLUS Loan - Basics Two categories of borrowers...parents of a dependent student and graduate/professional students Can be used to cover expected family contribution (EFC) PLUS loans are limited in amount to the Cost of Attendance (COA) less any estimated financial assistance (EFA) PLUS borrowers must undergo a credit check 4

5 Federal Direct PLUS Loan - Eligibility School eligibility - General Same as Direct Subsidized/Unsubsidized Loan Program Reflected as separate program PPA/eCAR Option to participate or not Non-participation is NOT grounds for offering or awarding additional unsubsidized funds to a dependent student You must first inform a graduate/professional student of his or her eligibility for a Direct Unsubsidized Loan before offering and awarding a Direct PLUS Loan 5

6 Federal Direct PLUS Loan - Eligibility Borrower eligibility - General A borrower (and student for whom parent is borrowing) must meet Title IV eligibility requirements found in 34 CFR 668 Subpart C School determines borrower eligibility and loan amount A borrower cannot have an adverse credit history as defined in CFR

7 Federal Direct PLUS Loan - Eligibility Parent borrower must be the student s biological or adoptive Mother or Father Can be a stepparent if his/her income and assets are used to calculate the EFC A legal guardian is not an eligible borrower Not eligible if delinquent on a debt to the Federal Government, or incarcerated 7

8 Federal Direct PLUS Loan - Eligibility A parent can borrow for multiple dependent students Unique parent/dependent student pair for each PLUS loan Unique PLUS Request via StudentLoans.gov website Unique Master Promissory Note (MPN) for each parent/student pair StudentLoans.gov will retain parent/student pair data for subsequent PLUS loans 8

9 Federal Direct PLUS Loan - Eligibility Graduate or professional student Eligible award year and forward School MUST determine eligibility for, and offer, Direct Unsubsidized Loan first Graduate/Professional students no longer eligible for subsidized loans Must meet Title IV eligibility requirements Must be enrolled at least half-time in an eligible program at an eligible school 9

10 Federal Direct PLUS Loan MPN Unique MPN NOT a subsidized/unsubsidized loan MPN Contains borrower and/or student data PLUS MPN used for ALL PLUS loans No financial data on the MPN COD generates a Disclosure Statement with loan financial data 7-days prior to the first disbursement (EDD) of each loan with accepted credit decision Expires 10 years from date of receipt at COD Expires in 12 months if there s no disbursement on a linked loan within that first year 10

11 Federal Direct PLUS Loan MPN PLUS MPN has N as type in MPN ID Student SSN, N, award year, school direct loan school code (G or E), sequence number XXXXXXXXXN14GXXXXX001 Links on the SSN, DOB, and first two characters of the first name of both borrower and student Unique MPN for each parent/student pair if multiple dependent students 11

12 Federal Direct PLUS Loan MPN Single-Loan MPN When an endorser is linked to the PLUS Loan MPN Linked MPN reflects a status of Inactive-Endorser Any future loan will need a new MPN 12

13 Federal Direct PLUS Loan Basics - Credit ALL Direct PLUS Loan Borrowers undergo a credit check Initiated by the school or the borrower The school via the loan origination record (LOR) The school online via the COD website The borrower via a Direct PLUS Request on the StudentLoans.gov website In my opinion regardless of the credit result, you should originate the PLUS loan if borrower is otherwise eligible 13

14 Federal Direct PLUS Loan - Credit Must have borrower authorization to conduct a credit check Part of Federal Direct PLUS Loan MPN Downloaded from COD website Hand written/faxed signed authorization SSN is the key identifier for a credit check and change will trigger a new credit history Reflected as inquiry on applicant s credit history 14

15 Federal Direct PLUS Loan - Credit A credit check result is valid for 90 days If additional activity occurs that would otherwise trigger a credit check during that 90-day period COD will use the result on the database If additional activity occurs that would otherwise trigger a credit check beyond the 90-day period COD will initiate a subsequent credit check Credit result can be Accepted (A) Declined (D) adverse credit history Pending (P) issue with the inquiry 15

16 Federal Direct PLUS Loan - Credit Denial of one parent is sufficient to offer additional unsubsidized loan funds to that dependent student Other parent does NOT have to undergo PLUS loan process A credit result of Declined is not school specific and can be used across schools on loans with the same academic year 16

17 Federal Direct PLUS Loan - Credit School can offer additional unsubsidized loan funds to a dependent student after determination of the inability of the Parent to borrow due to exceptional circumstances 34 CFR DCL ID: GEN Case-by-case DOCUMENT reason for determination of ineligibility 17

18 Federal Direct PLUS Loan - Credit School can forego the Direct PLUS Loan process altogether if you determine the Parent s ineligibility due to exceptional circumstances School can award the additional unsubsidized loan based on the parent s inability to obtain a PLUS loan due to exceptional circumstances even if the parent has already applied for a Direct PLUS Loan and been approved based on their credit check results COD does NOT look for a declined PLUS loan as validation against an incoming unsubsidized loan for a dependent student 18

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21 Federal Direct PLUS Loan - Credit PLUS loan with credit declination can be accepted and displayed on COD but with an unacceptable credit decision Can t disburse unless and until credit denial is cured by a successful appeal via COD or by borrower securing an endorser Initial declined credit status remains on the COD website and is NOT changed after a successful appeal or securing an endorser 21

22 Federal Direct PLUS Loan - Credit Appeal Appeals Appeal on extenuating circumstances or errant data from the Credit Bureau Appeal by submitting via fax the specific documents requested by COD Can start appeal process on StudentLoans.gov - instructions on StudentLoans.gov screens A successful appeal will result in a credit override response (Document Type CO) sent to the school Reconsideration Eligibility Reconsideration Report 22

23 Federal Direct PLUS Loan - Credit Appeal Credit Check Reconsideration Initiated by Customer Service at the COD School Relations Center Contact with declined borrower via explains and offers a second look at their declined credit Telephone number COD CSR explains the process and their option to pursue or decline NO ACTION IS TAKEN WITHOUT BORROWER CONTACT AND ACCEPTANCE OF RECONSIDERATION 23

24 Federal Direct PLUS Loan - Credit Appeal Credit Check Reconsideration Virtually all borrowers who pursue the reconsideration are approved during the telephone call If credit declination is overridden it will impact any already awarded/disbursed unsubsidized award COD immediately updates the borrower in the website and generates/transmits an override (CO) acknowledgement to the school 24

25 Federal Direct PLUS Loan - Credit Appeal Credit Check Reconsideration Eligibility report Generated weekly and posted to the school NewsBox on the COD website in CSV format Identifies borrowers at their school whose most recent credit check is eligible for reconsideration A borrower s credit check will be displayed on the report for 180 days from the record s Credit Check Date If the borrower appeal is accepted, he or she will not display on the following week s report 25

26 Federal Direct PLUS Loan - Endorser CANNOT be the student for whom the loan is intended Endorser undergoes a credit check Endorsed loan reported to credit bureau as any other financial obligation Endorser promises to pay outstanding principal balance, accrued interest, any penalties, AND any collection costs Endorser cannot back out of an originated PLUS loan Endorser completes an Endorser Addendum, NOT another MPN Paper or electronic via StudentLoans.gov 26

27 Federal Direct PLUS Loan - Endorser Endorser completes an electronic Endorser Addendum via StudentLoans.gov Must have FSA PIN to access StudentLoans.gov Uses PLUS loan ID (if PLUS Loan originated) or the Loan Reference Number (if PLUS Loan not originated) Additional security with COD Release 13.0 Endorser sets endorsed loan amount COD will send CO response to school if there is a PLUS loan origination on the COD database or Subsequent SP response if no LOR on COD 27

28 Federal Direct PLUS Loan - Endorser Endorser completes a paper Endorser Addendum The borrower can print a paper addendum for the endorser for submission off of the StudentLoans.gov website If no PLUS loan LOR on the system, no response from COD until PLUS loan LOR is submitted PLUS loan LOR will link to endorser addendum and COD will generate a CO response and send to school Graphic in the COD Technical Reference, Volume II, Section I, Page

29 Federal Direct PLUS Loan - Endorser Endorser data and endorsed amount displayed on the COD loan information screen Cannot disburse more than the lesser of the endorsed amount or loan amount approved Endorsed amount is displayed on response from StudentLoans.gov CANNOT increase a PLUS loan with an endorser Must create and originate a subsequent PLUS loan A new credit history on borrower and endorser if last credit check older than 90 days 29

30 Federal Direct PLUS Loan - Entrance Counseling First-time graduate & professional student PLUS borrower MUST complete PLUS entrance counseling prior to disbursement Not the same as undergraduate entrance counseling Offered at StudentLoans.gov Results sent to COD in Doc Type EC from StudentLoans.gov Schools are NOT required to use FSA online counseling 30

31 Federal Direct PLUS Loan - Processing School is responsible for determining eligibility for, and amount of, the PLUS award Anticipated and/or actual disbursements = loan amount Up to 20 actual disbursements Report ACTUAL date of disbursements Origination fee assessed on each actual disbursement 4.288% on loans first disbursed (EDD) on or after December 1, 2013 and on or before September 30,

32 Federal Direct PLUS Loan - Origination Via batch by submission of a Common Record (CR) CR response returned reflecting status of award, credit, actual disbursement (if applicable) and MPN Individually online at COD website Immediate editing of submitted data Manually create an award from the Person Information screen and submit Automatically create an award from the SP acknowledgement from StudentLoans.gov Creates a skeleton award to complete and submit 32

33 Federal Direct PLUS Loan - Processing CAVEAT - a school can decline to originate, or originate a lesser loan amount than requested, on a case-by-case basis You MUST document the reason You cannot do so on an across-the-board basis 34 CFR

34 Federal Direct PLUS Loan - Disbursement Assure eligibility of the dependent student Unless otherwise directed, any credit balance is given to the parent Generate and deliver the required school notifications Disburse via batch or online via the Award Disbursements Information screen Also disburse from the Action Queue 34

35 Federal Direct PLUS Loan - Disbursement The disbursement data MUST be accepted by COD within 15 days of the actual date of disbursement You must report the ACTUAL DISBURSEMENT DATE The date award funds are credited to the student s account or otherwise made available to the student/borrower Can be reported 7 days prior to the actual disbursement date If the anticipated disbursement date is not the actual date of disbursement, CHANGE IT! 35

36 Federal Direct PLUS Loan - Disbursement You may increase a PLUS loan already established on the COD database Change record if software allows New PLUS loan for the difference requested But you cannot increase an established PLUS loan if in receipt of a subsequent adverse credit decision If the established PLUS loan is NOT fully disbursed you can fully disburse it Alternatively, reduce remaining disbursements to $0 and offer student unsubsidized funds up to their eligibility for grade level and need 36

37 Federal Direct PLUS Loan - Disbursement If the established PLUS loan has been fully disbursed Offer the dependent student an additional unsubsidized loan up to their eligibility appropriate to their grade level and remaining need 37

38 Federal Direct PLUS Loan - Booking Once COD has received an accepted LOR, a linked MPN, and an actual disbursement the PLUS loan is booked Liability for funds transfer from the school to FSA Generally, disbursement #1, sequence #1 books the loan Each subsequent disbursement books as well When the loan is booked it is assigned to a Servicer Liability for any drawn funds migrates from the school to FSA 38

39 LDE : The Loan Distribution Engine is the interface that assigns a booked loan to a federal loan servicer 39

40 Federal Direct PLUS Loan - Repayment Deferment and Forbearance options available Parent can request to defer repayment while dependent student, or parent, is enrolled at an eligible school more than half-time Student does not need to request in-school deferment Parent can request to defer repayment for an additional six months from the date the dependent student ceases to be enrolled on at least a half-time basis 40

41 Federal Direct PLUS Loan - Repayment Repayment options much like subsidized/unsubsidized loan borrowers Standard Graduated Extended Must have outstanding loan balance > $30,000 Income dependent repayment plans are NOT available for parent PLUS loan Income-contingent repayment plan available for Direct Consolidation Loan that includes an underlying Parent PLUS Loan 41

42 Resources COD Technical Reference Volume II, Section I, Implementation Guide Code of Federal Regulations 34 CFR CFR 668 (General Student Assistance Provisions) COD School Relations Center Your Federal Loan School Support Point of Contact 42

43 Thank you for attending 43

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