Parents with bad credit will gain greater access to federal student loans to help cover their children’s undergraduate costs under a plan finalized by the Obama administration. The Education Department said that by next spring it would loosen credit standards for families borrowing from the agency’s Parent PLUS program. The loans are designed to cover tuition and living expenses when undergraduates reach the limits on their federal loans. The new rules would reverse a 2011 policy change that tightened credit standards for Parent PLUS loans. Some schools stated that the policy change led to a rise in denials which hurt enrollment and college revenues. Some consumer advocate groups have criticized the new plan, arguing it would burden families with debt they have no hope of repaying.
Contributor: Laissa Alexis