USA Funds Policy Experts Offer Points to Consider in FAFSA Requirement for PLUS Loans

Although it is not federally required, many schools require a completed Free Application for Federal Student Aid when a parent wants to apply for a PLUS loan.

For those schools considering whether they should require the FAFSA for parent PLUS applicants, USA Funds^® offers some points to consider.

The following are two key reasons many schools require the FAFSA for parent PLUS loans:

1. As student advocates, financial-aid administrators want to make sure the student qualifies for the best financial-aid package the school can award, and the FAFSA is key in this process. The results of the FAFSA enable the school to determine if the student is eligible for need-based aid that could decrease or eliminate the student’s need for any education loan, including a PLUS loan.
2. PLUS loans are federal loans, and certifying a PLUS loan obligates federal assets — so both the student and the parent must demonstrate eligibility. The FAFSA process enables the school to determine, question and confirm the student’s eligibility in an automated and expedited fashion through the many federal database matches that exist. 

If your school chooses not to require the FAFSA for parent PLUS applicants, your financial-aid office is responsible for collecting from those applicants information as it applies to the student’s Title-IV eligibility. This information can exclude items that relate to determination of the Expected Family Contribution. The following is information the financial-aid office must gather:

• Confirmation that the student has a high-school diploma or its equivalent.
• Verification that the student is a U.S. citizen or an eligible noncitizen.
• A valid Social Security number.
• Verification that the student is registered for the Selective Service, if required.
• Verification that the student is not in default on a Title-IV loan and that the student does not owe a repayment to a Title-IV grant program.
• Verification that the student meets the drug-conviction standards for qualifying for federal financial aid.

The school also will need to collect a Statement of Educational Purpose from the student.

In addition, the school should review an applicant’s eligibility information that otherwise would be included on the Institutional Student Information Record, to ensure that the applicant meets those eligibility criteria as well. For example, the school must ensure that the applicant has not borrowed in excess of any annual or aggregate loan limits.

Schools that do not require the FAFSA for parent PLUS applicants handle most of the eligibility documentation and validation processes manually, which can be labor intensive and time consuming for the applicant and the school, possibly delaying the delivery of aid. If this is the case at your school, you may want to advise the student or borrower so that the student or borrower can make appropriate arrangements.

For more information about requiring a completed FAFSA for PLUS-loan eligibility, contact USA Funds’ policy experts.