Lessons from Yet Another PLUS Loan Scandal

Andrew Gillen

PLUS loans are experiencing yet another scandal. The ultimate source of this particular one is the way the federal government calculates student loan default rates for college accountability. Colleges are punished if their student loan default rates go too high. But the government's default formula only includes Stafford loans. PLUS (both Parent and Grad) loans and Perkins loans are ignored in the calculation. This is a gaping loophole, and some colleges appear to have been exploiting it. As Rachel Fishman of New America explains:

"... there's evidence that some colleges and universities might be steering students away from other, better federal student loans and toward Parent PLUS to avoid penalties associated with high student loan default rates."

Posted by Jim Zellmer at July 22, 2013 12:35 AM
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