Duncan Apologizes on PLUS Loans

Education secretary tells black college leaders he's sorry for how his agency tightened underwriting standards for federal parent loans, which resulted in wave of loan denials. 

September 27, 2013

WASHINGTON -- U.S. Education Secretary Arne Duncan apologized Thursday for how his agency managed changes to the PLUS loan program that resulted in thousands of families being denied those loans.  

“I am not satisfied with the way we handled the updating and changes to the PLUS loan program,” he told a group of historically black college leaders gathered here for the Education Department's annual HBCU Week conference.

“Communication internally and externally was poor,” Duncan continued. “I apologize for that, and for the real impact it has had.”

Historically black colleges and universities were particularly hard hit by the department’s policy change, which tightened the eligibility requirements for PLUS loans in October 2011. Leaders at those institutions and other colleges said they were blindsided by the change that resulted in a wave of loan denials.

Black college presidents and leaders at other colleges that serve large numbers of low-income students sharply criticized the Obama administration for the restrictive new standards, which they said forced some students, without access to other forms of credit, to withdraw from their institutions.

As of earlier this year, 400,000 parents had been denied a PLUS loan since the new standards went into effect.

Under pressure from black college leaders and several members of Congress, the department last month said it would consider appeals from parents who were originally denied the loans.

At the HBCU conference Thursday, an Education Department official told college financial aid officers that the department had reversed the denials in more than 98 percent of the appeals that had been filed so far.

The Education Department plans to review its creditworthiness standards for the PLUS loan program during a negotiated rule making session set to begin next year. 

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Michael Stratford

Michael Stratford, Reporter, covers federal policy for Inside Higher Ed. He joined the publication in August 2013 after a stint covering the Arkansas state legislature for The Associated Press. He previously worked and interned at Kiplinger’s Personal Finance magazine and The Chronicle of Higher Education. At The Chronicle, he wrote about federal policy and covered higher education issues in the 2012 elections. Michael grew up in Belmont, Mass. and graduated from Cornell University, where he was managing editor of The Cornell Daily Sun.

Follow him on Twitter: twitter.com/mstratford.

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