CREDIT FREEZE AND PLUS LOAN CREDIT CHECKS

Because of recent data breaches and increased security concerns, many consumers taking steps to protect their personally identifiable information (PII) from unwanted disclosure. When a consumer places a “credit freeze” on their credit profile with the credit bureaus, credit activity such as a credit inquiry cannot be performed unless they give additional consent.
According to Federal Student Aid, since a credit check is part request process for a Direct PLUS Loan or borrower Endorser application borrowers or endorsers with an active credit freeze may not be able to fully complete either process and may receive an error message when the credit check is run. The borrower or endorser must remove the credit freeze first; this action cannot be done by the school or Federal Student Aid.
FSA implemented messaging on the StudentLoans.gov website back in October to inform borrowers and endorsers that those who have a credit freeze on their credit profile will need to remove it before completing a Direct PLUS Loan Request or the Endorser Addendum.
Schools using the “Quick Credit Check” on the COD Web Site could experience an error or “timeout” response as a result of a borrower’s credit freeze. In some cases, Federal Student Aid will not be able to return a credit check response with the origination record and will reject the record with COD Reject Edit 996 (Invalid Value). Again, when troubleshooting a credit issue with a borrower or endorser, schools may want to see if the credit freeze situation may apply. If you have additional questions about credit check processing, FSA recommends that you contact the COD School Relations Center.

HOW LONG IS A PLUS LOAN CREDIT CHECK GOOD FOR

With the 2018-2019 FAFSA available beginning on October 1, 2017, schools will be able to complete COD Web credit checks for 2018-2019 PLUS Loans beginning on October 1, 2017.

So how long is a credit check on a PLUS Loan good for?

Credit checks are good for only 180 days from date the credit check was performed. If more than 180 days has passed between the date the credit check was conducted and the date the Direct PLUS Loan origination record is processed, a new credit check will be conducted. Therefore, it is important for schools to carefully consider the timeframe between completing a COD Web credit check and Direct PLUS Loan origination record processing for the 2018-2019 Award Year. This applies to both Parent PLUS and Grad PLUS Loans.

HOW EARLY FAFSA IMPACTS PLUS LOAN CREDIT CHECK DURATION

With the 2017-2018 FAFSA available beginning on October 1, 2016, schools will be also able to complete a PLUS Loan Credit Check on COD for 2017-2018 beginning on October 1, 2016. However, the start of COD System processing for the 2017-2018 Award Year is planned for late March 2017 so schools will not be able to create origination records until then. Schools should take note and adjust their awarding processes to account for COD system availability when packaging PLUS Loans for parents and for graduate students.

PLUS LOAN CREDIT CHECK DURATION

Credit checks are good for only 180 days from date the credit check was performed. If more than 180 days has passed between the date the credit check was conducted and the date the Direct PLUS Loan origination record is processed, a new credit check will be run.  This causes additional credit inquiries which could affect a borrowers credit score and may return a different result. Therefore, it is important for schools to carefully consider the time-frame between completing a COD Web credit check and Direct PLUS Loan origination record when processing for the 2017-2018 Award Year.

Sequester Changes and Operational Guidance for Direct Loan Fee Change

As has been the case for the last few years, Sequester changes kick in beginning on October 1, 2016; the start of the Federal Government’s Fiscal Year. These changes impact loan origination fees in the Direct loan program and make reductions to the Iraq-Afghanistan Service Grant and Teach Grant programs where the first disbursement is made on or after 10/1/2016. I summarized this below for you Continue reading Sequester Changes and Operational Guidance for Direct Loan Fee Change