Bulletin ID
DLB - 97 - 44
| PublicationDate: 11/1/97 BulletinID: DLB - 97 - 44 November 1997 DLB-97-44 SUBJECT: PLUS Credit Decision Process at the Loan Origination Center Dear Colleague: The procedures for obtaining credit reports as part of the PLUS loan origination process have caused delays for some schools. In Direct Loan Bulletin 97-32, a change to origination processing was announced that would allow the Loan Origination Center (LOC) to return a problem record to a school with an error code 75. This error code is ONLY used for an origination edit problem. In addition to origination edits, the credit check process must be completed successfully for each record within the PLUS origination batch before the batch can be transmitted back to the school. THERE ARE SOME STEPS, HOWEVER, THAT SCHOOLS CAN TAKE TO REDUCE THE TURN AROUND TIME ON CREDIT CHECKS: - FIRST, batch loan origination records for applicants with international addresses separately. For such loans, the LOC uses a manual process to locate a valid United States address based on the borrower's social security number and last name. When an address is found, the LOC receives a credit report on that address. The credit check team makes a determination and the record is updated with an acceptance or denial. This international address process can take from 7 to 10 business days. The LOC and the Department of Education are working on a proposal to reduce this process to 2 business days. - SECOND, a common error found on PLUS loan origination records is placing the full name of the borrower in the last name field and leaving the first name field blank. This causes the credit agency to reject the record. These records must be manually corrected by the credit team at the LOC before resubmission to the credit agency. The credit team has been trying to keep the turn around time on these errors to 24 hours. The credit agency turns a credit request around in 48 hours, but when they reject a request, the chance of getting the entire batch back to the school within the desired five day turnaround becomes increasingly unlikely. Another proposal before the Department of Education will allow the LOC to do credit checks on-line from Montgomery to decrease the turnaround time on rejected records from the credit agencies. - THIRD, the final problem is incorrect address information. In order to verify that the LOC is receiving the correct credit check for the correct borrower, the Department of Education has set matching criteria for the credit system -- namely, social security number, last name, and address -- to obtain the highest accuracy rate. When the address cannot be matched, the credit team must research and call the school. If that source is unsuccessful, they must then try to contact the borrower. The fact that many people are not available during the day increases the delay. I hope that you will find this information helpful and that it will assist in expediting credit checks at the Loan Origination Center. Thank you for your support of the Direct Loan Program. Sincerely, Joe L. McCormick, Chair Direct Loan Task Force |