PLUS Processing A to Z

1. Session #20 PLUS Processing A to Z Wood Mason| Dec. 2014 U.S. Department of Education 2014 FSA Training Conference for Financial Aid Professionals

2. PLUS Processing A to Z Agenda • Basics • Eligibility • Master Promissory Note • Credit Check • Entrance Counseling • Processing Direct PLUS Loan data • Repayment

3. PLUS Processing A to Z Direct PLUS Loan basics • Two categories of borrowers • Parents of a Dependent Student • Graduate and/or Professional Student • Can be used to cover expected family contribution (EFC) • Direct PLUS Loans are limited in amount to the Cost of Attendance (COA) less any estimated financial assistance (EFA) • All Direct PLUS Loan borrowers must undergo a credit check • Data is reported to credit bureaus regularly as any other debt or financial obligation

4. PLUS Processing A to Z Federal Direct PLUS Loan - Program eligibility for schools • Same as for the Direct Subsidized/Unsubsidized Loan Program • Reflected as separate program PPA/eCAR • Option to participate or not participate • Non-participation is NOT grounds for offering or awarding additional unsubsidized funds to a dependent undergraduate student • You must first inform a graduate and/or professional student of his or her eligibility for a Direct Unsubsidized Loan before offering and awarding a Direct PLUS Loan

5. PLUS Processing A to Z Federal Direct PLUS Loan - Eligibility for borrowers • The borrower MUST meet Title IV eligibility requirements found in 34 CFR 668 Subpart C • The student for whom a parent is borrowing must also meet 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 685.200

6. PLUS Processing A to Z Federal Direct PLUS Loan – Eligibility for borrowers • Parent borrower must be the student’s biological or adoptive Mother or Father • A step-parent is considered a parent if married to a biological or adoptive parent and if the student counts in their household size • A legal guardian is not an eligible borrower • Not eligible if delinquent on a debt to the Federal Government or incarcerated

7. PLUS Processing A to Z • Federal Direct PLUS Loan – Eligibility for borrowers • 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. PLUS Processing A to Z • Federal Direct PLUS Loan – Eligibility for borrowers • Graduate or professional student • Eligible award year 2005-06 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. PLUS Processing A to Z Federal Direct PLUS Loan – Master Promissory Note (MPN) • Unique MPN – NOT a subsidized/unsubsidized loan MPN • XXXXXXXXXN15GXXXXX001 • Contains borrower and/or student data • PLUS MPN used for ALL PLUS loans • 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 • Expires 10 years from date of receipt in COD • 12 months if there’s no disbursement on a linked loan

10. PLUS Processing A to Z 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

11. PLUS Processing A to Z 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 • If done online by the school or the PLUS borrower you should originate the PLUS loan if borrower is otherwise eligible

12. PLUS Processing A to Z 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

13. PLUS Processing A to Z Federal Direct PLUS Loan Basics - Credit • An adverse credit history means that as of the date of the credit report, the applicant… • Is 90 or more days delinquent on any debt • During the five (5) years preceding the date of the credit report the applicant has been the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a debt under Title IV of the Higher Education Act • Absence of credit history is not considered adverse credit history

14. PLUS Processing A to Z Adverse credit criteria will change with COD Release 14.0 in late March 2015 • 34 CFR 600.200 will be amended to include the new criteria • Window for a credit check to “stand” on COD will be increased from 90-days to 180-days • Charge-off and collection accounts will now be included in the credit decision • Credit history is considered adverse with one or more debts with a combined outstanding balance > $2,085 that are 90 or more days delinquent as of the date of the credit report, or placed in collection/charged off within two years of the date of the credit report

15. PLUS Processing A to Z Adverse credit criteria will change with COD Release 14.0 in late March 2015 • Borrowers who successfully appeal an adverse credit history decision based on extenuating circumstances, or secure an endorser, MUST undergo PLUS Loan counseling • PLUS Loan counseling will be available on a voluntary basis for those who are not declined for adverse credit history

16. PLUS Processing A to Z Federal Direct PLUS Loan - Credit • Currently, 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

17. PLUS Processing A to Z 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

18. PLUS Processing A to Z 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 • Forego the PLUS Request process altogether • 34 CFR 685.203 • DCL ID: GEN-11-07 • Case-by-case • DOCUMENT reason for determination of ineligibility

19. PLUS Processing A to Z Federal Direct PLUS Loan - Credit • 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

20. PLUS Processing A to Z Federal Direct PLUS Loan - Credit • PLUS loan with credit declination can be accepted and displayed on COD • Common Record Response will carry COD Warning Edit #036 • Can’t disburse unless and until credit denial is cured • Initial declined credit status remains on the COD website • COD Release 13.2 (Mid-December, 2014) will see enhanced Parent PLUS Loan identifier validation • ONLY on Parent PLUS Loans with a credit check result of “Pending” and an identifier (SSN/DOB combination) mismatch between COD and the credit bureau • A new award level COD reject edit #216 accompany this change

21. PLUS Processing A to Z Federal Direct PLUS Loan - Credit Appeal • Appeals… • Appeal on extenuating circumstances or errant data from the Credit Bureau • Appeal by submitting 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

22. PLUS Processing A to Z Federal Direct PLUS Loan - Credit Appeal • Credit Check Reconsideration • Borrower was denied ONLY for Charge-Off Accounts and/or Collection Accounts and the borrower has at least one active accepted award on file with an EDD on or after 7/1/2010 and before 07/30/2013 with at least one funded disbursement and no endorser • Initiated by the COD Applicant Services • Contact with declined borrower via e-mail explains the process and offers a “second look” at their declined credit • NO ACTION IS TAKEN WITHOUT BORROWER CONTACT AND ACCEPTANCE OF RECONSIDERATION

23. PLUS Processing A to Z Federal Direct PLUS Loan - Credit Appeal • Credit Check Reconsideration • Borrowers who pursue the reconsideration can be 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. PLUS Processing A to Z 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. PLUS Processing A to Z Federal Direct PLUS Loan - Endorser • CANNOT be the student for whom the loan is intended • Endorser undergoes a credit history check • Endorser CANNOT appeal denial due to an adverse credit history • Endorser completes an Endorser Addendum • Endorser promises to pay outstanding principal balance, accrued interest, and any penalties, AND any collection costs • Paper or electronic via StudentLoans.gov • An endorsed loan is reported to the credit bureau • Endorser search function on the COD Reporting website

26. PLUS Processing A to Z Federal Direct PLUS Loan - Endorser • Endorser will need to provide the new Direct PLUS Loan Endorser Code AND the borrower’s last name, OR the Direct PLUS Loan ID AND the borrower’s last name to endorse a Direct PLUS Loan* • The Endorser authenticates using their FSA PIN • A borrower will receive the Direct PLUS Endorser Code via their confirmation e-mail • Also viewable on the completed Direct Loan PLUS Request on the StudentLoans.gov website AND the Direct PLUS Application Detail screen *The loan reference number is no longer used

27. PLUS Processing A to Z Federal Direct PLUS Loan - Endorser • If the endorser completes a paper Endorser Addendum • A Master Promissory Note for the endorser • 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

28. PLUS Processing A to Z 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 is older than 90 days* *180 days with COD Release 14.0

29. PLUS Processing A to Z 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 • COD sends a Counseling Response to the school • You are NOT REQUIRED to use FSA online counseling

30. PLUS Processing A to Z Federal Direct PLUS Loan – Processing Award Date • 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 • 4.292% on loans with an EDD on or after October 1, 2014 and before October 1, 2015

31. PLUS Processing A to Z Federal Direct PLUS Loan – Processing Award Data • 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. PLUS Processing A to Z Federal Direct PLUS Loan – Processing Award Data • 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 685.203

33. PLUS Processing A to Z Federal Direct PLUS Loan – Disbursements • 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. PLUS Processing A to Z Federal Direct PLUS Loan – Disbursements • The disbursement data MUST be reported to 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 seven days prior to the actual disbursement date • Make sure you are sending the ACTUAL date of disbursement and not mistakenly re-sending the anticipated disbursement date

35. PLUS Processing A to Z Federal Direct PLUS Loan – Disbursements • 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. PLUS Processing A to Z Federal Direct PLUS Loan – Disbursements • 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. PLUS Processing A to Z Federal Direct PLUS Loan – Disbursements • Once COD has received an accepted LOR with an acceptable credit decision, 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

38. PLUS Processing A to Z Servicers LDE : The Loan Distribution Engine is the interface that assigns a booked loan to a federal loan servicer

39. PLUS Processing A to Z 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. PLUS Processing A to Z Federal Direct PLUS Loan – Repayment • Repayment options much like subsidized/unsubsidized loan borrowers • Standard • Graduated • Extended • Minimum 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. PLUS Processing A to Z Resources… • COD Technical Reference • Volume II, Section I, “Implementation Guide” • Code of Federal Regulations • 34 CFR 685 • 34 CFR 668 (General Student Assistance Provisions) • Your Federal Loan School Support Team Point of Contact • Dlops@ed.Gov

42. PLUS Processing A to Z Resources… • COD School Relations Center • 800-557-7394 (Student Loan Support Center) • 800-848-0978 (Direct Loan Program) • 571-392-3737 (Foreign Schools) • CODSupport@ed.gov

43. QUESTIONS?

44. PLUS Processing A to Z Wood Mason U.S. Department of Education Federal Student Aid Atlanta, GA 770-383-9662 wood.mason@ed.gov

45. PLUS Processing A to Z Appendix A Direct PLUS Loan Master Promissory Note

46. PLUS Processing A to Z

47. PLUS Processing A to Z Appendix B Instant Online Credit Check

48. PLUS Processing A to Z

49. PLUS Processing A to Z

50. PLUS Processing A to Z