Parents Turned Down for PLUS Loans Will Be Allowed to Appeal

President Barack Obama has signed off on a policy that supporters say could make college affordable for more families. Changes to the PLUS loan program will allow families with small amounts of outstanding debt that have been denied loans under new, more stringent lending rules, to lodge an appeal of that decision.

Members of the Congressional Black Caucus along with presidents of historically black colleges have been calling for the change since the tougher rules went into effect. Unlike other federal student loan programs, the Parent PLUS loans are unlimited, but they carry the highest interest rates of any federally sponsored loans.

The protests over the PLUS program initially arose after the US Department of Education made a decision to consider delinquencies of more than 90 days when deciding weather to approve or reject applicants in 2011. Representative Marcia Fudge of Ohio has recently written a letter protesting the change, saying that it disadvantaged families of students enrolled in historically black schools.

“Actions taken by the Department of Education have disproportionately and adversely impacted students across this nation; in particular, more than 28,000 HBCU students. It is time to stop the bleeding,” she said.

Parents whose loan applications are denied may ask for reconsideration under the new policy.

The Education Department said students whose parents are denied PLUS loans automatically become eligible for an extra $4,000 in loans that are more flexible and carry lower interest rates.

The DOE has taken prior steps to lessen the impact of the change. Earlier this summer, officials announced that they would begin sending letters to applicants turned down for PLUS loans advising them on steps they can take to improve their credit scores. Now, the officials also promised to send information about loan reconsiderations to presidents of historically black colleges so that they may monitor how many of their students’ parents were able to eventually obtain a loan after being turned down initially.

Shaquille Brewster of the Associated Press writes that the United Negro College Fund reports that nearly 30,000 of HBC families were rejected for PLUS loans. The total for the entire country is 400,000, although various studies concluded that a greater number of families were affected.

The PLUS change is in line with the recent call by the President for easier college affordability on signing the compromise legislation which lowered interest rates for federal student loans and tied them to treasury bills.

However, at the signing ceremony, Obama warned that this measure is only the first step in what will prove to be a hard legislative fight to come up with a more comprehensive solution to the problem of college affordability. Speaking at the Oval Office, Obama praised lawmakers on both sides of the aisle for the work they put in to reach a compromise, but added that “our job is not done.”