plus processing a to z
DESCRIPTION
Session #9. PLUS Processing A to Z. Wood Mason | Dec. 2013 U.S. Department of Education 2013 FSA Training Conference for Financial Aid Professionals. Direct PLUS Loans from A to Z. Federal Direct PLUS Loan basics Federal Direct PLUS Loan eligibility School and Borrower - PowerPoint PPT PresentationTRANSCRIPT
Wood Mason | Dec. 2013
U.S. Department of Education
2013 FSA Training Conference for Financial Aid Professionals
PLUS Processing A to Z
Session #9
Direct PLUS Loans from A to Z
• Federal Direct PLUS Loan basics• Federal Direct PLUS Loan eligibility
School and Borrower
• Master Promissory Note• Credit Check• Entrance Counseling• Processing
DisbursingRepayment
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan - Basics• Two categories of borrowers...Parents of a dependent
student and graduate/professional students• Can be used to cover expected family contribution (EFC)• PLUS loans are limited in amount to the Cost of
Attendance (COA) less any estimated financial assistance (EFA)
• PLUS borrowers must undergo a credit check
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan - Eligibility• School eligibility - General
Same as Direct Subsidized/Unsubsidized Loan ProgramReflected as separate program PPA/eCAROption to participate or not If you participate in the Direct Subsidized/Unsubsidized Program
you are NOT required to participate in the Direct PLUS Loan Program*
Non-participation is NOT grounds for offering or awarding additional unsubsidized funds to a dependent student
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*You must first inform a graduate/professional student of his eligibility for a Direct Unsubsidized Loan before offering and awarding a Direct PLUS Loan
Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Eligibility • Borrower Eligibility - GeneralA borrower (and student for whom parent is borrowing)
must meet Title IV 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
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Eligibility• Parent must be the student’s biological or adoptive
Mother or FatherCan be a stepparent if his/her income and assets are used
to calculate the EFCA legal guardian is not an eligible borrowerNot eligible if delinquent on a debt to the Federal
Government, or incarcerated
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Eligibility• 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
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Eligibility• Graduate or professional student
Eligible award year 2005-2006 and forwardSchool MUST determine eligibility for, and offer, Direct
Unsubsidized Loan firstMust meet Title IV eligibility requirementsMust be enrolled at least half-time in an eligible program at
an eligible school
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics – Master Promissory Note (MPN)
• Unique MPN – NOT a subsidized/unsubsidized loan MPN
• Contains borrower and/or student data• PLUS MPN used for ALL PLUS loans
No financial data on the MPNCOD generates a “Disclosure Statement” with loan financial
data 7-days prior to the first disbursement (EDD) of each loan with accepted credit decision
• Expires 10 years from date of receipt at COD 12 months if there’s no disbursement on a linked loan
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics – Master Promissory Note
• PLUS MPN has “N” as “type” in MPN IDStudent SSN, “N,” award year, school direct loan school
code (G or E), sequence numberXXXXXXXXXN14GXXXXX001
• Links on the SSN, DOB, and first two characters of the first name of both borrower and studentMust use unique MPN for each parent/student “pair” if
multiple dependent students
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics – Master Promissory Note
• Single-Loan MPNWhen 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
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Direct PLUS Loans from 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 websiteThe borrower via a Direct PLUS Request on the
StudentLoans.gov website
• Regardless of the credit result, you should originate the PLUS loan if borrower is otherwise eligible
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Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Credit• Must have borrower authorization to conduct a
credit checkPart 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
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Credit• 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 historyPending (P) – issue with the inquiry
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Credit• Denial of one parent is sufficient to offer additional
unsubsidized loan funds to 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 in the same academic year
• School can forego the Direct PLUS Loan process with knowledge, and documentation, of inability of Parent to borrow due to exceptional circumstances34 CFR 685.203DCL ID: GEN-11-07
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Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics – Credit• PLUS loan with credit declination can be accepted and
displayed on COD but with an unacceptable credit decisionCan’t disburse unless and until credit denial is cured by a
successful appeal via COD or by borrower securing an endorser
Initial declined credit status remains on the COD website and is NOT changed after a successful appeal or securing an endorser
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics – Credit Appeal• Appeals…
Appeal on extenuating circumstances or errant data from the Credit Bureau
Appeal by submitting via fax the 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 EligibilityReconsideration Report
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COD will generate and make available to schools a new “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 credit check reconsideration
• If the borrower appeal is accepted, then the record will not display on the following week’s report
• A borrower’s credit check will be displayed on the report for 180 days from the record’s Credit Check Date
Direct PLUS Loans from A to Z
Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Endorser• CANNOT be the student for whom the loan is intended
Endorser undergoes a credit checkEndorsed loan reported to credit bureau as any other financial
obligationEndorser promises to pay outstanding principal balance,
accrued interest, any penalties, AND any collection costsEndorser cannot “backout” of an originated PLUS loan
Endorser completes an Endorser Addendum, NOT another MPN
Paper or electronic via StudentLoans.gov
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Endorser• Endorser completes an electronic Endorser Addendum
via StudentLoans.gov Must have FSA PIN to access StudentLoans.govUses PLUS loan ID (if PLUS Loan originated by school) or
the Loan Reference Number (if borrower has completed a PLUS Request via StudentLoans.gov and no LOR on COD database)
Endorser sets endorsed loan amountCOD will send “CO” response to school if there is a PLUS
loan origination on the COD database or…Subsequent “SP” response if no LOR on COD
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Endorser• Endorser completes a paper Endorser Addendum
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
Graphic in the 2013-2014 COD Technical Reference, Volume II, Section I, Page 166
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - 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 endorserMust create and originate a subsequent PLUS loanA new credit history on borrower and endorser if last credit
check older than 90 days
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Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics – Entrance Counseling
• First-time graduate & professional student PLUS borrower MUST complete PLUS entrance counseling prior to first disbursement of the PLUS loan Not the same as undergraduate entrance counselingOffered at StudentLoans.gov Results sent to COD in Doc Type “EC” from StudentLoans.govSchools are NOT required to use FSA online counseling
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Processing• 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
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Processing• Same origination and disbursement requirements as
Federal Direct Subsidized & Unsubsidized LoansAnticipated and/or actual disbursements equal to loan
amount required on origination Up to 20 actual disbursementsReport ACTUAL date of disbursementsOrigination fee assessed on each actual disbursement4.288% on loans first disbursed (EDD) on or after December 1,
2013 and on or before September 30, 2014COD code to validate EDD vs. origination fee migrated October
17, 2013
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics – Origination • 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.govCreates a “skeleton” award to complete and submit
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Processing • Data from a PLUS Request via the StudentLoans.gov
website will allow you to “create” an award from the “SP” responseDoes not include ALL the information necessary to originate the
awardAbility to begin appeal process if neededDOES NOT ORIGINATE AN AWARDResults in PLUS borrower/student demographic, loan request,
deferment, and disbursement information being sent to the school via the type “SP” acknowledgement
School is responsible for determining eligibility for and originating the PLUS loan
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Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
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Daffina Duck0000000003/12/1994
Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Disbursement• Assure eligibility of the dependent student• Disburse via batch or online via the Award
Disbursements Information screenAlso disburse from the Action Queue
• Unless otherwise directed, any credit balance is given to the parent
• Adhere to the normal and required school notifications• The disbursement data MUST be accepted by COD
within 15 days of the actual date of disbursement• You must report the ACTUAL DISBURSEMENT DATE
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Direct PLUS Loans from A to Z
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Disbursement• You may increase a PLUS loan 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
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Disbursement• 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
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics – Booking the PLUS loan
• Once COD has received an accepted LOR, a linked MPN, and an actual disbursement the PLUS loan is “booked” Generally, disbursement #1, sequence #1 books the loanEach subsequent disbursement books as wellWhen the loan is booked it is assigned to a ServicerLiability for any drawn funds migrates from the school to
FSA
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Direct PLUS Loans from A to Z
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LDE : The Loan Distribution Engine is the interface that assigns a booked loan to a federal loan servicer
Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - 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-timeStudent 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
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Direct PLUS Loans from A to Z
Federal Direct PLUS Loan Basics - Repayment• Repayment options much like subsidized/unsubsidized
loan borrowersStandardGraduatedExtendedMust have 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
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QUESTIONS?
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