wood mason| dec. 2014 u.s. department of education 2014 fsa training conference for financial aid...

Wood Mason| Dec. 2014

U.S. Department of Education

2014 FSA Training Conference for Financial Aid Professionals

PLUS Processing A to Z

Session #20


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

2


Direct PLUS Loan basics• Two categories of borrowers

Parents of a Dependent StudentGraduate 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

3


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 participateNon-participation is NOT grounds for offering or awarding additional

unsubsidized funds to a dependent undergraduate studentYou 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

4


Federal Direct PLUS Loan - Eligibility for borrowers• The borrower MUST meet Title IV eligibility requirements

found in 34 CFR 668 Subpart CThe 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

5


Federal Direct PLUS Loan – Eligibility for borrowers• Parent borrower must be the student’s biological or adoptive

Mother or FatherA step-parent is considered a parent if married to a biological or

adoptive parent and if the student counts in their household sizeA legal guardian is not an eligible borrowerNot eligible if delinquent on a debt to the Federal Government or

incarcerated

6


• Federal Direct PLUS Loan – Eligibility for borrowers• A parent can borrow for multiple dependent students

Unique parent/dependent student “pair” for each PLUS loanUnique PLUS Request via StudentLoans.gov websiteUnique Master Promissory Note (MPN) for each parent/student “pair” StudentLoans.gov will retain parent/student “pair” data for subsequent

PLUS loans

7


• Federal Direct PLUS Loan – Eligibility for borrowers• Graduate or professional student

Eligible award year 2005-06 and forwardSchool MUST determine eligibility for, and offer, Direct

Unsubsidized Loan first Graduate/Professional students no longer eligible for

subsidized loansMust meet Title IV eligibility requirementsMust be enrolled at least half-time in an eligible program at an

eligible school

8


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 studentUnique 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

9


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

10


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 websiteThe 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

11


Federal Direct PLUS Loan - Credit• Must have borrower authorization to conduct a credit check

Part of Federal Direct PLUS Loan MPNDownloaded 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

12


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

13


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 decisionCredit 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

14


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 counselingPLUS Loan counseling will be available on a voluntary basis for

those who are not declined for adverse credit history

15


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

16


Federal Direct PLUS Loan - Credit• Denial of one parent is sufficient to offer additional

unsubsidized loan funds to that dependent studentOther parent does NOT have to undergo PLUS loan processA credit result of Declined is not school specific and can be used

across schools on loans with the same academic year

17


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 circumstancesForego the PLUS Request process altogether34 CFR 685.203DCL ID: GEN-11-07Case-by-caseDOCUMENT reason for determination of ineligibility

18


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

19


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 #036Can’t disburse unless and until credit denial is curedInitial declined credit status remains on the COD website

• COD Release 13.2 (Mid-December, 2014) will see enhanced Parent PLUS Loan identifier validationONLY 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

20


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 CODCan start appeal process on StudentLoans.gov - instructions on

StudentLoans.gov screensA successful appeal will result in a credit override response

(Document Type CO) sent to the schoolReconsideration Eligibility

21


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 ServicesContact with declined borrower via e-mail explains the process and

offers a “second look” at their declined creditNO ACTION IS TAKEN WITHOUT BORROWER CONTACT AND

ACCEPTANCE OF RECONSIDERATION

22


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

23


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

24


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 costsPaper or electronic via StudentLoans.gov

• An endorsed loan is reported to the credit bureau• Endorser search function on the COD Reporting website

25


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

26


Federal Direct PLUS Loan - Endorser• If the endorser completes a paper Endorser Addendum

A Master Promissory Note for the endorserThe 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 submittedPLUS loan LOR will link to endorser addendum and COD will

generate a “CO” response and send to school

27


Federal Direct PLUS Loan - Endorser• Endorser data and endorsed amount displayed on the

COD loan information screenCannot 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 loanA new credit history on borrower and endorser if last credit check

is older than 90 days*

*180 days with COD Release 14.0

28


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 counselingOffered at StudentLoans.govCOD sends a Counseling Response to the schoolYou are NOT REQUIRED to use FSA online counseling

29


Federal Direct PLUS Loan – Processing Award Date• School is responsible for determining eligibility for, and

amount of, the PLUS awardAnticipated and/or actual disbursements = loan amountUp to 20 actual disbursementsReport ACTUAL date of disbursementsOrigination fee assessed on each actual disbursement 4.292% on loans with an EDD on or after October 1, 2014 and before

October 1, 2015

30


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 websiteImmediate editing of submitted dataManually 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

31


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 basisYou MUST document the reasonYou cannot do so on an across-the-board basis34 CFR 685.203

32


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 screenAlso disburse from the Action Queue

33


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 dateMake sure you are sending the ACTUAL date of disbursement and

not mistakenly re-sending the anticipated disbursement date

34


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 decisionIf the established PLUS loan is NOT fully disbursed you can fully

disburse itAlternatively, reduce remaining disbursements to $0 and offer

student unsubsidized funds up to their eligibility for grade level and need

35


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

36


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 FSAGenerally, disbursement #1, sequence #1 books the loanEach subsequent disbursement books as wellWhen the loan is booked it is assigned to a Servicer

37


38

LDE : The Loan Distribution Engine is the interface that assigns a booked loan to a federal loan servicer

Servicers


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

39


Federal Direct PLUS Loan – Repayment• Repayment options much like subsidized/unsubsidized

loan borrowersStandardGraduatedExtended 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

40


Resources…• COD Technical Reference

Volume II, Section I, “Implementation Guide”

• Code of Federal Regulations34 CFR 68534 CFR 668 (General Student Assistance Provisions)

• Your Federal Loan School Support Team Point of [email protected]

41


Resources…• COD School Relations Center

800-557-7394 (Student Loan Support Center)800-848-0978 (Direct Loan Program) 571-392-3737 (Foreign Schools)[email protected]

42

QUESTIONS?

43


44

Wood Mason

U.S. Department of Education

Federal Student Aid

Atlanta, GA

770-383-9662

[email protected]


45

Appendix A

Direct PLUS Loan Master Promissory Note


46


47

Appendix B

Instant Online Credit Check


48

49


50



51

Appendix C

Endorser Search and return


52

53

Daffina Duck0000000003/12/1994



54

Appendix D

Endorser Addendum


55

wood mason| dec. 2014 u.s. department of education 2014 fsa training conference for financial aid...

Documents

plus processing

direct plus loan borrowers

plus loan unique plus

z direct plus loan basics

direct unsubsidized

subsequent plus loans

plus loans links

borrower eligibility