The denial rate for PLUS loans to parents is twice as high in the guaranteed-student-loan program as in the government-run direct-loan program, according to an analysis of government data by Mark Kantrowitz, publisher of Finaid.org. Mr. Kantrowitz attributes the difference to stricter underwriting standards adopted by some banks. Last year the denial rate was 42 percent in the guaranteed-loan program and 21 percent in the direct-loan program.
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2 Responses to Lenders Are Making Fewer PLUS Loans to Parents, Analysis Finds
lawarren67 - September 1, 2009 at 5:09 pm
So what this is saying is some kids who really should be in college can’t because their parents filed for bankruptcy because of loosing a job or having a adjustable rate mortgage. Not the smartest way to take care of the next generation.
handley - September 2, 2009 at 8:52 am
lawarren67 — You missed the point of the article. What it says is that parents are twice as likely to be approved via the Direct Loan program than through private banks. Since Plus Loans are credit-based, it’s normal for people with bad credit to be approved. That’s good, we don’t want to lend taxpayer money to people who won’t pay it back. It’s just that the banks issued a lot of bad loans in the past decade, and now the pendulum has swung the other way.