PLUS Loans: What to Do if You’re Denied Based on Adverse Credit History

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If you’re a parent or graduate student seeking a Direct PLUS Loan, one of the requirements to qualify is that you must not have an adverse credit history. If your application is denied because of an adverse credit history, don’t give up. You still have options.

Ultimately, your school is responsible for confirming that you meet all the eligibility requirements for a PLUS loan. But during the Direct PLUS Loan Application process, you’ll go through a credit check to confirm one specific requirement: not having an adverse credit history.

This credit check is not the same as the kind of check you’d go through for a car loan or a mortgage. For this check, your credit history is considered “adverse” if you’ve had specific kinds of credit problems, such as

  • recent accounts totaling $2,085 or more that are 90 days delinquent, charged off, or placed in collection; or
  • a recent bankruptcy discharge, tax lien, wage garnishment, or foreclosure.

Note: For a credit check to be performed, you must lift or remove any security freezes from your credit file at each credit bureau.

We’ll notify you if you don’t qualify for a PLUS loan based on adverse credit. But there are other things you can do. Here are four options to consider that may help you pay for college expenses. 


Obtain an endorser.

If you get an adverse credit result, you can still qualify for a PLUS loan if you get an endorser. To go this route, you’ll also have to complete PLUS Credit Counseling.

An endorser is kind of like a cosigner. An endorser is someone who

  • doesn’t have adverse credit and
  • agrees to pay back your Direct PLUS Loan if you don’t.

If you’re a parent, the endorser can’t be the student you’re borrowing for.

Your endorser can fill out the Endorser Addendum online. Then they will undergo a credit check. If the person who fills out the Endorser Addendum gets an adverse credit result, that person can’t endorse your PLUS loan.

If you get an endorser and complete PLUS Credit Counseling, your school will let you know if you’re eligible for a loan.


File an appeal.

If you get an adverse credit result, you may be able to file an appeal to ask for additional review. If you go this route, you’ll also need to complete PLUS Credit Counseling.

You have the right to appeal an adverse credit decision if you think it

  • was made in error,
  • is missing important information, or
  • is based on data that is now out of date.

These kinds of situations are called “extenuating circumstances.” For example, maybe there were errors in your credit reporting data. Or maybe your adverse credit result was based on accounts that don’t belong to you. Or you could have been a victim of identity theft. Find more examples of what counts as an extenuating circumstance.

When you file your appeal, you’ll need to provide documents to support your case. These documents should prove your extenuating circumstances and show that you’re taking steps to resolve your adverse accounts. You can find explanations of what kinds of documents you’d need under each example of an extenuating circumstance at the link above.

You can file an appeal online. If you can’t file online, reach out to our contact center at 1-800-433-3243. If your appeal is approved and you complete PLUS Credit Counseling, your school will let you know if you are eligible for a loan.


Get additional Direct Unsubsidized Loans.

If you’re a parent and you’re unable to get a PLUS loan, your child may be able to get additional unsubsidized loan funds.

Normally, a dependent student can’t get as much unsubsidized loan funding as an independent student can. But when you’re denied for a parent PLUS loan, the school may offer your child the higher maximum amount of unsubsidized loans that is otherwise available only to independent students. Find info about Direct Unsubsidized Loans and how they differ from subsidized loans.

Contact the school’s financial aid office for more information about this option.


Talk to the school’s financial aid office about other options.

School financial aid offices can be your best resource for additional funding.

Financial aid offices often have the best knowledge of what state or institutional funds are still available. They may be able to connect you with info about local or school scholarships.

When in doubt, reach out to your school’s financial aid office! They can give you personalized help that’s tailored to your specific situation.

You or your child should ask your financial aid office what options might be available for you based on your specific circumstances. You should definitely do this if you’ve recently experienced changes in your financial situation.