The Parent PLUS loan (PPL) program crisis shaking many of the nation’s colleges and universities today started in 2010 as a small, “routine” and “technical” change in the credit criteria for loan applicants to the increasingly popular program, say federal officials now wrestling with the unexpected loan denial fallout from college officials across the country.
The “routine” changes resulted in parents of thousands of students being unable to qualify for loans to support tuition for their children in the fall of 2012.
University officials across the higher education landscape fear the pattern will be the same, or worsen, for the coming school year.
In addition to derailing college plans for thousands of students across the country, the new credit rules have cost scores of colleges and universities millions of dollars in anticipated student tuition revenue, much of which they say they have not been able to replace with other sources of funds.
“We’re already very sensitized to what impact this has had,” said Jerry Shelton, acting assistant secretary of the U.S. Department of Education, the federal department that controls the Federal Student Aid loan programs including Parent PLUS loans.
“We’re also trying to figure if there should be changes in the rules,” said Shelton who a month ago took responsibility for the Federal Student Aid office as part of a new department assignment.
Shelton said his office has no quick fix that will address the outcry of complaints about the adverse impact families and institutions say the new rules are having. At the same time he issued a strong call for families that had PPL loans before the new rules took effect to seek reconsideration, if they have since been denied a PPL loan.
