Office of Scholarships and Financial Aid
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Protect Your Credit

Review your award letter to determine if you were awarded credit based Federal Student loans or Private Educational loans. When considering these loans you should take into account the tight credit markets for credit based student loans in general.  Some students are already finding it difficult to finance their education with the Grad-PLUS because of an adverse credit history. If you need credit based loans to finance your education, you must protect your credit thereby protecting your ability to secure these loans and finish your program of study.

Student Loan Programs that requires a borrower to pass a credit check before the loan is approved.

  • Federal Direct Grad PLUS Loan
  • Federal Direct Parent PLUS
  • Any Private Education Loan
     

FAQs: Credit Check for Federal Student Loans is based on Adverse Credit

Click Credit Check at https://studentloans.gov/myDirectLoan/faqs.action for explanation of:

  • What does not count against you in the credit application process?
  • What is considered  Adverse Credit?
  • What are the options if denied?
  • How long will it take to appeal if declined?
     

What You Can Do Now

Review these simple steps you can take to help protect your credit and thereby protect your ability to complete your program of study.
1. Always make your credit payments on time.
2. Only borrow what you need
3. Do not apply for unnecessary credit. Don’t apply for credit cards just to get the free gifts.
4. Review your free credit report in January every year. This will give you time to clear up items if necessary.
4. Resolve any outstanding issues on your credit report
5. If items on your credit report can not be resolved, you should work out an endorser arrangement with a credit
   credit worthy person for the full length of your program.
6. As a student, your objective should be to only have long term student loan debt when you finish your program of study.
7. Do not use credit cards to pay for educational expense items.

Again, if you will need the Grad PLUS or Private Educational loans to complete your Master’s or Doctoral program you must protect your credit to ensure you can complete the program.
 

How Federal Direct Student Loans are Reported to the Credit Agencies

  • The US Department of Education (ED) is your lender for Federal Direct Student Loans.
  • Student loans are reported to all three credit agencies.
  • The ED agency’s logo that will appear on the credit report should be something similar to FED Servicing.
  • Federal Direct Loans are reported based on the disbursement of the loan and not the payment of your Bursar’s account.

o For example, if you were offered and accepted three different loan types (Federal Direct Subsidized, Unsubsidized and Grad PLUS Loans), all three loans will be reported separately on the credit report with two separate disbursements each.

o Another example, if you have three separate Grad PLUS loans in the same academic year, all three loans will be reported separately on the credit report with two separate disbursements each.
 
  • Currently, credit checks for Federal Direct Parent PLUS and Federal Direct Grad PLUS loans are only valid for 90 days. For both loans, a new credit check is generated for every loan you accept or reinstate that are 90 days apart.

o For example (second loan request): If you accept a Federal Direct Grad PLUS loan in August for $5,000 and accept a second Federal Direct Grad PLUS loan in January for $10,000, a second credit check is run on the second Federal Direct Grad PLUS loan.

o Another example (reinstatement of loan): Your parent requested a Federal Direct Parent PLUS loan in August then cancelled the loan in September. In March, your parent asks that the loan be reinstated. A second credit check would be required to reinstate the loan because the initial credit check was only valid for 90 days from August.

 

Resources  to Help You Protect Your Credit

Federal Trade Commission
How to access your free credit reports

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre34.shtm

Federal Reserve Bank of San Francisco
http://www.frbsf.org/publications/consumer/credit.html
 

The Big Three Credit agencies

Equifax         http://www.equifax.com/home/
Experian       http://www.experian.com/
Trans Union  http://www.transunion.com/

  • Office of Scholarships and Financial Aid, P.O. Box 210066, Tucson, AZ 85721
  • Phone: 520.621.1858
  • Fax: 520.621.9473