student.	For	example,	if	a	student9s	biological	or	legal	adoptive	parents	are	divorced,	they	may	decide	to	each	take	out	a
Direct	PLUS	Loan	for	an	agreed	upon	amount	(not	to	exceed	the	student9s	COA,	minus	other	financial	assistance	(OFA))	to
help	pay	for	the	cost	of	the	student9s	education.
Requirement	for	Dependent	Students	To	File	a	FAFSA	Form
In	all	cases,	the	dependent	student	on	whose	behalf	a	parent	has	applied	for	a	Direct	PLUS	Loan	must	have	filed	a	FAFSA
form	and	received	an	Institutional	Student	Information	Record	(ISIR)	or	FAFSA	Submission	Summary	(see	Chapter	1	of	the
Application	and	Verification	Guide	for	information	on	the	ISIR	and	FAFSA	Submission	Summary).	This	requirement	ensures
that	student	eligibility	data	matches	are	conducted	to	verify	that	the	dependent	student	on	whose	behalf	the	parent	is
borrowing:
Is	not	in	default	on	a	Title	IV	loan	and	does	not	owe	an	overpayment	on	a	Title	IV	grant;
Has	had	their	Social	Security	number	verified	by	the	Social	Security	Administration;	and
Has	had	their	citizenship	status	confirmed	by	either	the	Social	Security	Administration	or	the	Department	of
Homeland	Security.
Note	that	this	requirement	is	for	the	student	to	submit	a	FAFSA	form.	It	is	not	a	requirement	for	the	parent	borrower	to
submit	a	FAFSA	form	in	the	parent9s	name,	and	it	does	not	preclude	an	otherwise	eligible	parent	whose	information	is	not
included	on	the	FAFSA	form	(sometimes	referred	to	as	a	<non-custodial=	parent)	from	obtaining	a	Direct	PLUS	Loan.
Before	originating	a	Direct	PLUS	Loan	for	a	parent	borrower,	schools	must	review	the	ISIR	or	FAFSA	Submission	Summary
of	the	dependent	student	to	ensure	there	are	no	student	eligibility	issues	that	must	be	resolved	before	the	parent	can
receive	the	Direct	PLUS	Loan.
Adverse	Credit	History
An	individual	with	an	adverse	credit	history	is	prohibited	from	obtaining	a	Direct	PLUS	Loan	unless	they	meet	additional
eligibility	requirements.	The	Department	obtains	a	credit	report	on	each	student	or	parent	applicant	for	a	Direct	PLUS
Loan.	An	applicant	is	considered	to	have	an	adverse	credit	history	if:
They	have	one	or	more	debts	with	a	total	combined	outstanding	balance	greater	than	$2,085	that	(1)	are	90	or	more
days	delinquent	as	of	the	date	of	the	credit	report,	or	(2)	have	been	placed	in	collection	or	charged-off	during	the	two
years	preceding	the	date	of	the	credit	report;	or
During	the	five	years	preceding	the	date	of	the	credit	report,	the	applicant	has	been	determined	to	be	in	default	on	a
debt;	has	had	debts	discharged	in	bankruptcy;	or	has	been	the	subject	of	foreclosure,	repossession,	tax	lien,	wage
garnishment,	or	write-off	of	a	Title	IV	debt.
For	Direct	PLUS	Loan	eligibility	purposes,	<charged-off=	means	a	debt	that	has	been	written	off	as	a	loss,	but	that	is	still
subject	to	collection	action.	<In	collection=	means	a	debt	that	has	been	placed	with	a	collection	agency	by	a	creditor	or
that	is	subject	to	more	intensive	efforts	by	a	creditor	to	recover	amounts	owed	from	a	borrower	who	has	not	responded
satisfactorily	to	the	routine	demands	of	the	creditor9s	billing	procedures.
An	applicant	cannot	be	denied	a	Direct	PLUS	Loan	because	they	have	no	credit	history.	That	is,	the	absence	of	a	credit
history	is	not	considered	to	be	adverse	credit.
There	are	two	means	by	which	a	Direct	PLUS	Loan	applicant	with	an	adverse	credit	history	can	still	qualify	for	a	Direct
PLUS	Loan.	One	option	is	for	the	applicant	to	obtain	an	endorser	who	doesn9t	have	an	adverse	credit	history.	An	endorser
is	someone	who	agrees	to	repay	the	Direct	PLUS	Loan	if	the	borrower	doesn9t	repay	it.	For	a	parent	borrower,	the
endorser	may	not	be	the	dependent	student	for	whom	the	parent	is	borrowing.
As	an	alternative	to	obtaining	an	endorser,	an	applicant	who	has	been	determined	to	have	an	adverse	credit	history	may
also	qualify	for	a	Direct	PLUS	Loan	by	submitting	documentation	to	the	Department	showing	that	there	are	extenuating
circumstances	associated	with	the	adverse	credit.	The	Department	has	the	final	decision	on	determining	whether
extenuating	circumstances	exist.
A	borrower	who	qualifies	for	a	Direct	PLUS	Loan	by	obtaining	an	endorser	or	documenting	to	the	satisfaction	of	the
Department	that	extenuating	circumstances	exist	must	also	complete	PLUS	Loan	Credit	Counseling,	as	discussed	below.
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