Federal Direct PLUS Loan Denial

Federal Direct PLUS Loan Denial Information


The Parent PLUS Loan is a federal education loan program many families utilize to pay for tuition, room, and board not covered by financial aid or other loans, such as Direct Student Loans, provided to the student.  In the Parent PLUS Loan program, the borrower is a parent.  However, credit is a factor in determining eligibility for the PLUS loan and not everyone will be approved. While the credit criteria used to determine approval for PLUS are not as stringent as they are for other consumer loans, a parent borrower still needs to meet a few credit-based conditions in order to receive financing.  If those conditions aren’t met, a PLUS loan denial will be the result.  

If you have been denied, don’t give up hope, there are still a few options left!




On this page: (click to jump to section)

Why was I denied the Parent PLUS Loan?

What are my options if I am denied the Parent PLUS Loan?

How do I choose which option I want to proceed with?

What do I need to do once I choose my denial option?

Why was I denied the Parent PLUS Loan?


In general, you will be denied if you have adverse credit consisting of any of the following:

      • Bankruptcy discharge within the past five years
      • Voluntary surrender of personal property to avoid repossession within the last five years
      • Collateral repossession within the past five years
      • Foreclosure proceedings started Foreclosure within the last five years
      • Conveying your real property that is subject to a mortgage (by deed) to your lender to avoid foreclosure (deed in lieu of foreclosure)
      • Accounts currently 90 days or more delinquent
      • Unpaid collection accounts
      • Charge-offs/write-offs of federal student loans
      • Wage garnishment within the last five years
      • Defaulting on a loan, even if the claim has been paid
      • Lease or contract terminated by default
      • County/state/federal tax lien within the past five years

In order to determine if one of those conditions applies, a credit check will be performed.  If denied, you will receive an adverse action letter with an explanation for the particular reason(s) for the denial.

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What are my options if I am denied the Parent PLUS Loan?


If you have been denied a PLUS loan, you still have a couple of options you can pursue to pay for your child’s education.

Get a co-signer (endorser):

      • If you are denied PLUS, you can have someone other than the student endorse (cosign) your loan.  An endorser becomes financially obligated to repay the loan if you cannot.  Most parents turn to another family member to act as an endorser, but you are not limited to having a family member serve in this role

File an appeal:

      • If you have extenuating circumstances that led to adverse credit and you can document it, you can request reconsideration.  Approval upon reconsideration is at the sole discretion of the U.S. Department of Education.

Request additional unsubsidized Loan:

      • If you cannot get someone to endorse your loan or do not have extenuating circumstances, the student may be able to borrow additional funds through the Direct Unsubsidized Student Loan program. Freshmen and Sophomores may borrow up to an additional $4,000. Juniors and Seniors may borrow up to $5,000. The school will determine the amount based on how much room is left in the student’s budget (COA minus other aid including loans).

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How do I choose which option I want to proceed with?


After you have completed the application for the Parent PLUS Loan and have been denied, you will be presented with the following four options:

    1. I do not wish to pursue a PLUS loan at this time
        • If you choose this option, the PLUS loan will not be processed and the student will be awarded additional funds in an Unsubsidized Loan.
    2. I will obtain an endorser*
        • Choose this option of you would like to add a co-signer. Your application will be processed after we receive notification of the endorser approval.
    3. I want to appeal the credit decision* 
        • Choose this option if you believe the credit check is inaccurate or you can provide updated information about extenuating circumstances.
    4. Undecided**
        • If you choose this option, the student will be awarded additional funds in an Unsubsidized Loan.

* If you are obtaining an endorser or appealing your credit decision, your PLUS Loan will be treated as a denial until the school receives certification that your endorsed/appealed loan has been approved. This means that the student may be awarded additional Unsubsidized Loan until the school is notified of your updated credit decision. Once the school is notified, any additional Unsubsidized Loan awarded due to the original denial will be returned and the PLUS Loan will be awarded in its place.

** If at any time you want to change the option that you chose, contact the Department of Education.

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What do I need to do once I choose my denial option?


Do Not Wish to Pursue ( Request Additional Unsubsidized Loan)

If the parent is denied from borrowing through the Federal Direct PLUS Loan program, the dependent student can receive an additional Unsubsidized Federal Direct Loan. The student can be awarded up to the maximums provided for independent undergraduate students.

      • Up to an additional $4000 per academic year for freshman and sophomores (0-59 credits earned); or up to an additional $5000 for junior and senior students per academic year (59-180 credits earned).
      • If you do not wish to receive the additional Unsubsidized Loan, please contact the Office of Financial Aid.
      • This option is NOT available to Graduate/Professional students applying for the Direct Graduate PLUS Loan.

Apply with an Endorser:

An endorser is someone who agrees to repay the Direct PLUS Loan if the borrower becomes delinquent in making payments or defaults on the loan. The endorser must be a credit-worthy individual and may not be the student on whose behalf the PLUS Loan was requested. The endorser will be required to complete an Endorser Addendum with a loan reference number and endorser code provided to the borrower during the application process.

      • If you do not know your loan reference number and endorser code to give to your endorser, log into your account at studentloans.gov and click on the link View My Documents, then select the drop to and filter by PLUS Loan Application, and select the appropriate aid year. Your application will appear below and your loan reference number and endorser code will be listed. Your endorser needs both of these to complete their part of the application.
      • Please note that whatever amount the endorser chooses to borrow, is the maximum that can be awarded. Once they sign the endorser addendum this loan cannot be increased. If you were to need additional funds, an entirely new application must be submitted.
      • The borrower will also have to complete Plus Loan Credit Counseling at www.studentloans.gov

Appeal Credit Decision:

A borrower has the option to appeal the credit decision on a Parent PLUS Loan. To begin the appeal process, visit www.studentloans.gov and choose the Appeal Credit Decision option. You may have to submit supporting documentation. Contact the Direct Loan Servicing Center if you have additional questions about the appeal process. 

Undecided:

If the parent is denied the PLUS Loan and chooses this option, the dependent student will be awarded additional Unsubsidized Federal Direct Loan. The student can be awarded up to the maximums provided for independent undergraduate students.

      • Up to an additional $4000 per academic year for freshman and sophomores (0-59 credits earned); or up to an additional $5000 for junior and senior students per academic year (59-180 credits earned).
      • If you do not wish to receive the additional Unsubsidized Loan, please contact the Office of Financial Aid.
      • If you wish to change your decision and add an Endorser or Appeal, you must contact the Direct Loan Servicing Center.This option is NOT available to Graduate/Professional students applying for the Direct Graduate PLUS Loan.
          • If you go through the appeal process or you've added an endorser,  and your loan is now approved, any additional Unsubsidized Loan received will be returned to the Department of Education and the PLUS Loan will be processed in its place.

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