Dear Secretary Duncan:
Consumers Union, the policy and advocacy arm of Consumer Reports®, appreciates the opportunity to comment regarding the Department’s Notice of Proposed Rulemaking to revise the definition of “adverse credit” for the PLUS loan program. We appreciate the Department’s efforts to balance access to funds with consumer protections. However, as we previously stated during the negotiated rulemaking sessions that developed this proposal, we believe that the proposed definition of adverse credit goes too far to loosen underwriting standards for loans that come with high interest rates and no borrowing caps.
Given these concerns, we urge the Department to amend the proposed definition of adverse credit by (1) lowering the loan amounts exempted from upfront review to $1000, and (2) setting the lookback period at three years, instead of two, for evaluating collection and charge-off accounts. We also urge the Department to ensure that any additional loan counseling for PLUS loan applicants will encourage them to borrow only the amounts they need to pay for reasonable college expenses. Finally, we urge the Department to release meaningful repayment data on PLUS loans, and to support efforts in Congress to improve the PLUS loan program going forward.
Click the link below to read the entire comment.