Dive Brief:
- The U.S. Department of Education has released data that shows how many federal PLUS loan applications have been denied, which applicants have been denied, and why.
- Of the PLUS loan applications that were initially denied in the past two years, nearly 70% were rejected because the applicant had debts in collection or settled debts for less than the full amount.
- After the department implemented stricter credit requirements for borrowers, for the 2012-2013 academic year the PLUS loan denials increased by 13 to 15 percentage points, depending on the type of college.
Dive Insight:
Department of Education PLUS loans are used by graduate and undergraduate students, and parents of undergraduates, to pay for education expenses not funded by other financial aid. The department released its PLUS loan data ahead of scheduled negotiations over potential changes to the loan program, according to the Chronicle of Higher Education. The average principal and interest balance on a PLUS loan for parents is $19,941 at public four-year colleges and $27,443 and at private four-year schools. The total of the parent loan balances for the program is more than $62 billion, with 85% for four-year non-profit colleges and 14% for two- and four-year for-profit schools. Separately, the United Negro College Fund has released a white paper showing that the number of PLUS-loan borrowers at historically black colleges and universities is 32% lower than it was two years ago.
