What to Do If You Are Denied a Parent PLUS Loan

Introduction
When a Parent PLUS Loan application is denied, it can feel like a significant setback, especially when you're trying to support your child's education. However, being denied doesn't mean all hope is lost. In this article, we'll explore what steps you can take if your Parent PLUS Loan is denied, alternative funding options, and how to improve your chances of approval in the future.

Understanding the Parent PLUS Loan Denial
Parent PLUS Loans are federal loans available to parents of dependent undergraduate students to help pay for college. However, they require a credit check, and denial often results from adverse credit history. Common reasons for denial include recent bankruptcies, foreclosures, or a history of late payments. Understanding why your application was denied is the first step in addressing the problem.

Step 1: Review the Denial Reason
After receiving the denial, carefully review the reason provided. The U.S. Department of Education typically sends a letter explaining why the loan was denied. This information is crucial because it determines your next steps. For instance, if the denial is due to adverse credit history, you may still be able to obtain the loan with an endorser or by documenting extenuating circumstances.

Step 2: Consider an Endorser
An endorser is someone who agrees to repay the Parent PLUS Loan if you are unable to do so. The endorser must have a good credit history and meet the same credit requirements as the borrower. Having an endorser can significantly increase your chances of being approved for the loan. It's important to note that the endorser is legally responsible for the loan, just as you are.

Step 3: Document Extenuating Circumstances
If your credit history includes adverse events, but you have reasons that explain your situation, you can appeal the denial by documenting extenuating circumstances. This process involves providing the U.S. Department of Education with evidence, such as medical bills or loss of income, to show that the adverse credit events were beyond your control. If approved, you may still be able to receive the loan without an endorser.

Step 4: Explore Alternative Loans
If your Parent PLUS Loan denial cannot be overturned, consider alternative loan options. Private student loans, offered by banks and credit unions, may be available to you or your child. However, these loans often have stricter credit requirements and higher interest rates than federal loans. It's essential to compare terms and conditions carefully before choosing a private loan.

Step 5: Increase Your Child's Federal Loan Eligibility
If you're unable to secure a Parent PLUS Loan, your child may be eligible for additional unsubsidized federal student loans. The federal government increases the loan limits for students whose parents are denied a Parent PLUS Loan, allowing them to borrow more to cover educational costs. This option can reduce the need for private loans, which typically have less favorable terms.

Step 6: Consider a Payment Plan or Tuition Assistance
Many colleges offer tuition payment plans that allow you to spread the cost of education over several months rather than paying a lump sum at the start of the semester. Some schools also offer tuition assistance programs for families facing financial hardship. These options can help manage the cost of education without relying solely on loans.

Step 7: Improve Your Credit for Future Applications
If you plan to reapply for a Parent PLUS Loan in the future, take steps to improve your credit. This may include paying off existing debt, making timely payments on all accounts, and addressing any errors on your credit report. Improving your credit score can increase your chances of approval and may also qualify you for better loan terms.

Conclusion
Being denied a Parent PLUS Loan can be stressful, but it doesn't have to be the end of the road. By understanding the reasons for denial, considering alternative options, and taking steps to improve your credit, you can still find a way to fund your child's education. Remember, there are multiple avenues to explore, and with careful planning, you can overcome this obstacle.

Data Analysis: The Impact of Parent PLUS Loan Denials

Reason for Denial	Percentage of Denials
Adverse Credit History	85%
Incomplete Application	10%
Insufficient Income	5%

The table above shows that the majority of Parent PLUS Loan denials are due to adverse credit history. Understanding these statistics can help you focus on areas that need improvement if you plan to reapply.

Key Takeaways

• Endorser Option: Having a creditworthy endorser can significantly increase your chances of approval.
• Extenuating Circumstances: If applicable, documenting extenuating circumstances can overturn a denial.
• Alternative Funding: Private loans and increased federal loan eligibility for your child are viable alternatives.
• Credit Improvement: Take steps to improve your credit score for future loan applications.