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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

PLUS Processing A to Z Servicers MOHELA Granite State GSMR Navient Great Lakes FedLoan Svcg Aspire Resources Inc. CornerStone ESA Edfinancial NelNet OSLA Servicing VSAC Federal Loans LDE : The Loan Distribution Engine is the interface that assigns a booked loan to a federal loan servicer

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

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

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

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

QUESTIONS?

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

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

PLUS Processing A to Z

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

PLUS Processing A to Z

PLUS Processing A to Z

PLUS Processing A to Z

Endorser Search and return PLUS Processing A to Z Appendix C Endorser Search and return

PLUS Processing A to Z

PLUS Processing A to Z Daffina Duck 000000000 3/12/1994

PLUS Processing A to Z Appendix D Endorser Addendum

PLUS Processing A to Z