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() Summary: Common Origination and Disbursement PLUS Loan Credit Check Processing Update

Publication Date: August 2002

Bulletin ID: DLB-02-27

Summary: Common Origination and Disbursement PLUS Loan Credit Check Processing Update

August 2002�


Summary: Common Origination and Disbursement PLUS Loan Credit Check Processing Update

Dear Partner,

This bulletin provides important information concerning the processing of credit check decisions at Common Origination and Disbursement (COD) covering the period of June 3, 2002 through August 5, 2002. Please review this bulletin carefully to determine the impact at your school.

Credit Decision Processing

After COD started the processing of credit decisions on June 3, 2002, the denial rate experienced was higher than previous award years. In the past few weeks, COD re-evaluated the approval and declined criteria and processing modifications were completed on August 5, 2002. As a result, the credit approval rate has increased.

For schools who have submitted origination records for borrowers with credit denials from the time period of June 3rd to August 5th, COD will reprocess the transactions and generate a new response to the school. The result will also generate a new credit acceptance or denial letter to the borrower. This correspondence will also include an enclosure explaining that an appeal has been done on their behalf. A copy of the enclosures is attached to this bulletin. Phase-in schools will receive a #C acknowledgement, and Full Participant schools will receive a response with the corrected status. The reprocessing of the affected credit checks is expected to begin sometime during the week of August 26, 2002.

This process will only affect borrowers whose credit check resulted in a denial. Schools that have performed credit checks on the COD Website are encouraged to submit origination records and have them process through COD so that we can update the school with the change in status.

Additional Unsubsidized Loans

When a PLUS credit check is denied, schools have the option of offering additional unsubsidized loans to students. If schools have chosen this option for previously denied credit checks, and the credit check comes back approved after it has been reprocessed, the student may still be eligible for the additional award amounts, in addition to the PLUS Loan. At this point, there are three options:

1) Cancel the additional unsubsidized award entirely and replace with full PLUS amount,

2) Provide a reduced PLUS loan in addition to the unsubsidized award. If the unsubsidized award is partially disbursed, you must cancel any subsequent pending disbursements. In addition, you must count any accepted disbursements on the additional unsubsidized award as estimated financial assistance when determining the PLUS loan amount that the parent is eligible to borrow or,

3) If the parent does not want the PLUS loan, leave any portion of the additional unsubsidized loan that may have been awarded -- regardless of whether any of it has been disbursed -- as is.

We apologize for any inconvenience resulting from these issues and hope this bulletin covers some of your questions and concerns. If you have any questions concerning COD, you may contact the COD School Relations Center at (800) 848-0978. Staff is available Monday through Friday, 8 a.m. - 8 p.m. (ET). You may also email inquiries to

We thank you for your support of the COD system and for your ongoing partnership in the Direct Loan Program.


Jane Holman
Acting Director, Title IV Delivery
Schools Channel