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20 août 2013

The Ed Department Blinks on Parent PLUS Loans

http://higheredwatch.newamerica.net/sites/all/themes/nafbase/images/logo.pngBy Rachel Fishman, Ben Miller. This blog post is the third part in a series that takes a look at recent changes to the credit criteria for Parent PLUS loans and the subsequent effect on colleges and universities. You can find the introductory post here and the second post here.
For nearly a year the Department of Education has been under a firestorm of criticism from the Historically Black College and University (HBCU) community
and its advocates over changes to the PLUS loan program that they say reduced revenue and enrollment at these institutions. According to an article yesterday in the Chronicle of Higher Education, the Education Department finally relented and made further accommodations to help more applicants get approved, while promising to rethink the criteria as part of a rulemaking session next spring. But did loosening criteria really solve a national policy problem? Or was it a set of changes to benefit a small subset of institutions, the result of which will mean greater amounts of worse debt for families?
The Department’s changes were outlined in a letter to Rep. Marcia Fudge (D-Ohio), the Chair of the Congressional Black Caucus. In it Education Secretary Arne Duncan wrote that, the Department would more than double the size of debt it considers to be “de minimis,” allowing rejected borrowers with larger debts of any type to be approved through an appeals process. "We believe this may help families who have relatively small adverse credit events that negatively impact their credit histories, such as unpaid medical debt, parking tickets, or cell phone bills of greater than 90 days duration,” the letter says. More...

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