What to Do If You Get Denied a Parent PLUS Loan

Receiving a denial for a Parent PLUS Loan can be disheartening, but it is important to know that there are alternative options and steps you can take to address the situation. The Parent PLUS Loan, a federal student loan program for parents of dependent undergraduate students, can be denied for various reasons. Understanding these reasons and exploring your options can help you find a path forward.

1. Understand the Reasons for Denial
The first step is to understand why your Parent PLUS Loan application was denied. Common reasons include:

• Credit History Issues: The most frequent reason for denial is an adverse credit history. This includes a history of late payments, defaults, or bankruptcy.
• Inadequate Income: Sometimes, a parent’s income may not be sufficient to cover the loan payments, leading to denial.
• Incomplete or Incorrect Information: Errors in the application or missing information can also result in a denial.

2. Review and Address Credit Issues
If your application was denied due to credit issues, you can take several steps:

• Obtain a Credit Report: Check your credit report to understand the specific issues affecting your credit score. You can get a free report from the three major credit bureaus: Equifax, Experian, and TransUnion.
• Address Credit Problems: Work on improving your credit score by paying off outstanding debts, resolving any inaccuracies on your credit report, and managing your credit responsibly.
• Consider a Credit Counseling Service: Seek help from a credit counseling service to get professional advice on improving your credit score.

3. Appeal the Denial
You have the option to appeal the denial decision:

• Contact the Loan Servicer: Reach out to the Federal Student Aid (FSA) or your loan servicer to discuss the denial and request a reconsideration.
• Provide Documentation: If there were errors or changes in your financial situation since the denial, provide updated documentation to support your appeal.

4. Explore Alternative Funding Options
If appealing the denial does not work or if you prefer to explore other options, consider the following:

• Private Loans: Look into private student loans from banks or credit unions. Be aware that these may have higher interest rates and less favorable terms compared to federal loans.
• Federal Direct Subsidized or Unsubsidized Loans: Your student may be eligible for these types of federal loans, which do not require a credit check for parents.
• Scholarships and Grants: Investigate scholarship and grant opportunities that can help cover education costs without the need for a loan.
• Work-Study Programs: Encourage your student to apply for work-study programs that provide part-time work opportunities to help pay for school.

5. Seek Financial Aid Counseling
Visit your child’s school’s financial aid office for personalized advice. Financial aid counselors can provide guidance on:

• Alternative Financing Options: They can suggest other funding options and help you understand the application processes.
• Budgeting and Financial Planning: Counselors can offer tips on managing educational expenses and budgeting effectively.

6. Consider Loan Consolidation or Repayment Plans
If you have existing loans or are facing financial challenges, look into:

• Loan Consolidation: Combining multiple loans into one can simplify payments and potentially lower interest rates.
• Income-Driven Repayment Plans: These plans adjust your monthly payment based on your income, making them more manageable.

7. Stay Informed and Updated
Keep up with changes in federal student loan policies and financial aid opportunities:

• Regularly Check for Updates: The U.S. Department of Education and other resources provide updates on loan programs and financial aid.
• Participate in Financial Aid Workshops: Attend workshops or webinars to stay informed about financial aid and loan options.

Conclusion
Getting denied for a Parent PLUS Loan can be a setback, but it does not mean the end of your ability to support your child's education. By understanding the reasons for denial, addressing credit issues, appealing the decision, and exploring alternative funding options, you can find a solution that works for your family's financial situation.