Direct PLUS Program enhanced for students
October 24, 2014
The Department of Education announced publication of a final rule to strengthen the Federal Direct PLUS Loan Program helping more students and families pay for college, and ensuring they have the tools and resources to make informed decisions about financing their educational pursuits.
The new regulations will both expand student access to postsecondary education and safeguard taxpayer dollars by reflecting economic and programmatic changes that have occurred since the program was established more than 20 years ago.
“The Department’s top priority is to ensure more students can access and successfully complete a postsecondary education,” said U.S. Secretary of Education Arne Duncan. “The updated borrowing standards for the PLUS loan program demonstrate our commitment to ensuring families have access to the financing they need to reach their goal, while being good stewards of taxpayer money.”
The final regulations update the definition of “adverse credit history” for PLUS loan applicants, and implement a streamlined application process for borrowers to obtain a PLUS loan, specifically for those with adverse credit histories. Economic conditions have changed considerably in the last 20 years, and this update will ensure the regulations reflect current circumstances.
The department also is taking action to provide families with clear, customized information about their loan obligations to support their college financing decisions and ensure their loan debt stays manageable.
To better ensure families are aware of, can fully understand and are comfortable with their loan obligations, the department is developing a new loan counseling tool that would provide customized information to assist PLUS borrowers. While PLUS borrowers with an adverse credit history determination would be required to complete counseling before their loan could be approved under the department’s reconsideration process, the tool will be made available to PLUS loan borrowers.
Finally, to provide more transparency in the PLUS loan program, the department will also collect and, where appropriate, publish information about the performance of PLUS loans, including default rate information based on credit history characteristics of PLUS loan borrowers and individual institutional default rates.