T.H.E. Federal Graduate PLUS Loan

START OF FEDERAL GRADUATE PLUS
T.H.E. believes there is some confusing language in the legislation that created the Federal Graduate and Professional Student PLUS (the Federal Graduate PLUS) program. Also, information about the Federal Graduate PLUS landed in Financial Aid offices with little or no advance notice and with little guidance regarding implementation and best practices.

After careful study of the legislation language, and after review of the commentary and interpretation of other industry sources (the Education Fund Council [EFC], finaid.org, the National Council of Higher Education Loan Programs [NCHELP] and others), T.H.E. has prepared this document. Information and language taken from these sources are incorporated into portions of this document without specific acknowledgment.

Conclusions of the T.H.E. Study
It is the opinion of T.H.E. that the Federal Graduate PLUS is a valuable and beneficial loan program that can likely be adopted by most Financial Aid offices and presented to the benefit of the borrowing graduate student. The Federal Graduate PLUS can be effective in helping schools to fund and retain students while providing them with a loan vehicle that affords them the best rates, terms and flexibility.

With the guidance of the Financial Aid Office, students can be introduced to the Federal Graduate PLUS Loan as an instrument that might fit well into the financing strategy that is best for them. In short, the Federal Graduate PLUS is a new lending tool that can be used to provide 100% funding to accepted students without a substantial increase in the Financial Aid workload.

In parallel to the preparation of this document, T.H.E. has already taken the steps necessary to make it easy for schools to incorporate the Federal Graduate PLUS into their financial aid portfolio, and, steps to enable each school to incorporate the Federal Graduate PLUS in a manner that will work well with each individual Financial Aid office.

Background
Beginning with the 2006-07 academic year, graduate students were able to borrow through the Federal Graduate PLUS loan program. Congress passed legislation (Section 8005(c) of the Deficit Reduction Act of 2005) giving graduate students the option to choose between a Private loan and the new “Graduate and Professional Student PLUS” (the Federal Graduate PLUS) loan when it comes to bridging the gap between their financial aid package and the remaining cost of education.

In this legislation, it was the intent of Congress to: 1) slow the growth of higher cost variable rate Alternative (or private) loan financing; 2) allow more students better access to full education funding; and 3) create a potential revenue source for the federal budget. Graduate students are required to complete the Free Application for Federal Student Aid (FAFSA) and must also first apply for their annual loan maximum eligibility under the Federal Subsidized and Unsubsidized Stafford Loan Program before applying for a the Federal Graduate PLUS loan.

T.H.E. Response
At T.H.E., we view the Federal Graduate PLUS loan as simply being another opportunity to help a student satisfy any unmet need for education financing. In a very real sense, the Graduate PLUS is … an alternative to alternative loans.

This is another opportunity to leverage the strengths of our philosophy and business practices.
T.H.E.:

• Is a not-for-profit lender.

• Historically, more than 95% of students in repayment received the stated benefits, compared to other programs that are designed to minimize the percent that qualify.

• Offers unparalleled personal customer service levels with experienced, trained and qualified in-house team members who directly serve school and student customers.

• Is the industry-recognized leader with advanced technology utilization and proprietary systems designed exclusively for student loans.

• Offers innovative programs and always-competitive loan terms and rates.

• Changed the industry by initiating zero fee Stafford loans, causing other lenders to follow, resulting in savings for students across the country amounting to hundreds of millions of dollars.