WASHINGTON (AP) — The Education Department has loosened credit requirements for a federal student loan program used by parents and graduate students.
A new regulation announced Wednesday updates the definition of adverse credit history as it pertains to the federal PLUS loan program. Under the rule, a potential borrower with overdue debt less than $2,085 is considered not to have adverse credit history. Others may still be able to participate if they pass additional steps, but must participate in loan counseling.
In 2011, the department rolled out more restrictive requirements. Afterward, there was an outcry from Historically Black Colleges and Universities, which serve a low-income population and have seen thousands of students lose eligibility.
The Education Department estimates about 370,000 more loan applicants will pass the credit history check under the regulations. As the regulations currently stand, some of these same borrowers would have to go through several extra steps to qualify.