Trends and Issues

Question of the week

Q.: If an otherwise eligible dependent undergraduate student's parent has been denied a PLUS loan, may a school refuse to certify an additional unsubsidized Stafford loan for that student? In other words, is it up to the school's discretion whether the student may have access to those loan funds?

A.: If an otherwise eligible dependent undergraduate student requests the additional unsubsidized Stafford funds due to a parental PLUS loan denial, the school must certify those funds, with rare exception. Recently updated language in the Common Manual Subsection 6.15.D states that "[t]he school is not permitted to deny the additional funds to an otherwise eligible student, unless the school's refusal to certify is based on a documented reason." Refusing to certify a loan or reducing a borrower's eligibility is discussed in Subsection 6.15.E:

"A school may refuse to certify a loan or may reduce the borrower's eligibility for a loan (on a borrower-by-borrower basis) if it provides the reason for its action to the borrower in writing and retains documentation of the reason in the student's file. Reasons for refusing to certify a loan or reducing the borrower's eligibility for the loan might include:

• The school determines that the student's expenses to be covered by the loan (cost of attendance) can be met more appropriately by the school or directly by the student and/or borrower from other sources.
• The borrower indicates an unwillingness to repay the loan.

A school may not refuse to certify a loan if that refusal is based on policies that result in a pattern or practice of denying access to FFELP loans because of borrower race, sex, religion, national origin, age, income, or selection of a particular lender or guarantor. Practices at the school also may not discriminate against student borrowers who are physically, emotionally, or intellectually challenged — provided the student exhibits an appropriate ability to benefit. The school also may not refuse to certify a loan solely because it is aware that the student or borrower has filed a bankruptcy petition."

To download the latest version of the Common Manual, go to www.tgslc.org/resources/integrated_online_manual.cfm.

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