BeautyLink - Volume 7, Issue 3 - (Page 18)

A Rewrite of History - PLUS Loan Adverse Credit History, That Is AND THEN THERE'S COMPLIANCE THE US DEPARTMENT of Education (ED) recently modi- fied the Federal Direct PLUS Loan adverse credit history regulations. The change came after significant public dissatisfaction arose over the PLUS Loan credit approval process. The Federal Direct PLUS Loan final regulations were published on October 23, 2014. These final regulations were scheduled to be operational as of July 1, 2015. But, ED subsequently published in a January 27 Electronic Announcment that the effective date of implementation of the regulations would be March 29, 2015. Adverse Credit History Described The new regulations stipulate that a PLUS Loan applicant is considered to have an adverse credit history if the applicant has one or more debts where the total combined outstanding balance of those debts is greater than $2,085, and they: * Are 90 days or more delinquent, or * Are in collection, or * have been charged off during the two years preceding the date of the applicant's credit report. The above criteria are in addition to the historic prohibitions (bankruptcy, a tax lien, or a student loan default) that also create an adverse credit history for PLUS. Eligibility Determination after Adverse Credit History A PLUS Loan applicant who has an adverse credit history may still be determined to be PLUS-eligible in two circumstances: * If the applicant satisfactorily meets the extenuating circumstances provision in the regulations, or * If the applicant obtains an endorser. ED also extended the duration for which the credit check for a PLUS Loan applicant remains valid. As a result of the new regulations, a credit check result remains valid for 180 days. This article is presented for informational and educational purposes only and should not be considered legal advice. BY SHERWIN HIBBETS PLUS Loan Counseling If an applicant with adverse credit is subsequently determined to be eligible, the borrower must complete PLUS Loan counseling. This counseling is provided by ED. It is not an option for the school to provide the counseling. It must be accomplished via ED's site. Applicants must complete the PLUS counseling in one sitting. PLUS Loan counseling is not the same as student loan entrance counseling. If a borrower is otherwise required to complete entrance counseling and also will obtain a PLUS Loan after an initial adverse credit history determination, the applicant must complete the required PLUS counseling in addition to the student loan entrance counseling. PLUS counseling must be completed prior to disbursement of PLUS Loan funds. Any applicant may complete this counseling. It is not limited to PLUS borrowers who had adverse credit history determinations. Note that PLUS Loan counseling is applicable for the duration of the credit check validity. Therefore, in some cases, a borrower may have to repeat PLUS Loan counseling. Implementing the New Regulations Schools must ensure all information related to the PLUS Loan application process is updated to incorporate the new rules. Updates should be made in any communication formats the school currently uses, whether in print or electronic. Beyond the information dissemination that is necessary for PLUS applicants, schools should also educate staff about the changes. The Common Origination and Disbursement (COD) system has new indicators on the records that confirm all credit-related requirements have been met and that the loan may be disbursed. COD now also provides new responses and reports. These enable schools to know applicants' status regarding the original credit decision, the decision expiration date, those who met the credit requirements within the past 30 days, etc. This information is beneficial as staff work with students and PLUS applicants. Schools should determine which policies and procedures they need to modify or create. * How will the school notify applicants of the status of their PLUS request? * How will the school monitor and act on the results of credit checks? * Does the school have a plan for explaining the need for PLUS counseling and tracking appropriate applicants' completion? * Will the school notify prior 2014-2015 PLUS applicants of the possibility of reconsideration based upon the new criteria if they had prior adverse credit determinations, and the student is still enrolled in the summer crossover period? As the new PLUS regulations have recently become effective, financial aid administrators will undoubtedly find opportunities to assist more individuals through the PLUS Loan process. It is important to be knowledgeable and prepared for these new regulations as you work to help applicants' with adverse credit histories have a chance to rewrite their future history. Sherwin Hibbets is director of Regulatory Affairs for FAME. The courses FA230 - Financial Aid Management - Compliance without Compromise and FA110 - Developing an Efficient Financial Aid Office are available on the AACS Online Training Center. Members call AACS at 800-831-1086 for your VIP Discount Code. Visit the following URL to learn more about these courses: and 18 | B E AU TYLINK | N A ILI NG IT! | 2015 Learn More

Table of Contents for the Digital Edition of BeautyLink - Volume 7, Issue 3

Message From the Aacs President and CEA Chair
CEA Annual Convention & Expo Preview
Event Recap: 2015 Spring Executive Retreat & Financial Aid Workshop
AACS’ New State Relations Program Advisor
And Than There's Compliance
Producing Professionals
Fall’s Top Nail Trends
Superstar Graduate
Beauty Schools Aim to Bring New Life to Nail Tech Programs
Multicultural Corner
A Student's Perspective
Beauty Changes Lives
People & Places
New Products and Services
Associate Member Profiles: Nail Specialty Companies
New School Members
Upcoming 2015 Events
Index to Advertisers

BeautyLink - Volume 7, Issue 3