WASHINGTON — Since the Education Department changed its underwriting standards for loans to students’ parents in 2011, 400,000 parents have been denied the loans. The denials have fallen disproportionately on historically black colleges and universities, whose leaders pleaded with the Obama administration Tuesday to reconsider the policy.
“Our students and families are in crisis now,” Michael Lomax, president and chief executive officer of the United Negro College Fund, told Education Department officials Tuesday. Lomax spoke at a hearing at which department officials sought input in advance of a new round of negotiated rule-making, which will consider underwriting standards for PLUS loans, among many other topics.
Through the federal parent PLUS loan program, parents of college students can borrow up to the cost of attendance at a student's college — often tens of thousands of dollars. Unlike other federal student loans, parent PLUS loans require a credit check. But until recently, it wasn’t particularly stringent: Before October 2011, borrowers would be approved if they didn’t have any accounts that were more than 90 days delinquent, or any foreclosures, bankruptcies, tax liens, wage garnishments or defaults within the past five years. During the 2010-11 academic year, 72 percent of PLUS loan applicants were approved.
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