What should we do if our Parent PLUS Loan is denied?

The Parent PLUS Loan is available to borrowers who do not have an adverse credit history.

There are several options available to a student whose parent is denied a Parent PLUS Loan because of an adverse credit history.

  • If only one parent has bad credit, the other parent could apply for the Parent PLUS Loan.
  • If the adverse credit history is due to a current delinquency, the parent could cure the delinquency by bringing the account current and then reapply for the Parent PLUS Loan after the delinquency no longer appears on the parent’s credit history.
  • The parent could also appeal an adverse credit history in certain circumstances.

Another option is for the parent to obtain an endorser to help him/her qualify for the Parent PLUS Loan despite the adverse credit history. Note that the student cannot be the endorser on Parent PLUS Loans borrowed on his or her behalf.

Finally, a dependent student whose parent is denied a Parent PLUS Loan becomes eligible for the same Direct Unsubsidized Loan limits available to independent undergraduate students. These loan limits, which vary according to class level, are $4,000 or $5,000 higher per year than the usual maximum Direct Loan limits available to dependent undergraduate students.

Both the Parent PLUS Loan and Grad PLUS Loan involve a modest credit check that just looks for an adverse credit history. The borrower’s credit scores or debt-to-income ratios do not affect eligibility for the PLUS Loan.