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(GEN-99-11) Improvements to the Master Promissory Note for Federal Stafford Loans in the Federal Family Education (FFEL) Program

DCLPublicationDate: 3/1/99
DCLID: GEN-99-11
AwardYear:
Summary: Improvements to the Master Promissory Note for Federal Stafford Loans in the Federal Family Education (FFEL) Program


March 1999

GEN-99-11

Subject: Improvements to the Master Promissory Note for Federal Stafford Loans in the Federal Family Education (FFEL) Program


Dear Colleague:

Our Chief Operating Officer, Greg Woods, has listened to your concerns about the FFEL Master Promissory Note. The FFEL Master Promissory Note and related forms were approved for use beginning for the 1999-2000 academic year in a February 1999 Dear Colleague Letter (GEN-99-9). In response to the issues you raised after that letter was issued, Greg asked FFEL Program Policy staff to develop new language for the MPN.

We are pleased to announce that MPN item 11 and the instructions for item 11 now give students information about reducing or canceling a loan; loan amount information is no longer collected in the item.

The Revised MPN

Rather than providing a space for the student to enter a loan amount requested for the academic period for which the student seeks a loan, the item 11 box of the revised MPN will use the same space to inform the student of the right to cancel or request a lower loan amount for each academic period than the amount the school determines the student is eligible to receive. The student is told to contact the school or lender if the student wants to cancel or request a lower loan amount.

Item 11 on the front page of the revised MPN will read:

"Requested Loan Amount: I request a total amount of subsidized and unsubsidized loans under this Master Promissory Note not to exceed the allowable maximums under the Higher Education Act. My school will notify me of the type(s) and amount(s) of loan(s) that I am eligible to receive. I may decline a loan or request a lower amount by contacting my lender or school. Additional information about my right to cancel or reduce my loan is included in the Borrower's Rights and Responsibilities statement and Disclosure Statements that have been or will be provided to me."

Item 11 on the Instructions and Notices page of the revised MPN will read:

"Item 11: Your school will notify you of the amount of subsidized and unsubsidized Stafford Loans you are eligible to receive for this and subsequent academic periods. You may decline a loan or request a lower amount by contacting your lender or school. Additional information is included under "Loan Cancellation" in the Borrower's Rights and Responsibilities Statement.”

The change to item 11 makes the processing of the student’s initial loan consistent with the processing of subsequent loans made under the MPN. This change only effects the MPN and related instruction for item 11. All other forms previously approved as part of DCL GEN-99-9 are unchanged. We have attached a copy of the revised MPN and Instructions to this letter for your information.

The process that enabled us to obtain quick approval of the revised MPN temporarily limits the use of the document to a 6 months. We are already developing the necessary papers to extend the clearance through the end of the 1999-2000 academic year. There will be no interruption in the use of the revised form.

The Original MPN - Impact on Forms Printed and/or Distributed

You may begin using the revised MPN as soon as it is printed and distributed by guarantors and lenders. We are aware that some guarantors and lenders may have already printed and distributed the previously approved original MPN. If a school participating in the FFEL program has already received a supply of the previously approved original MPN, the school should contact the guarantor or lender that provided the forms to find out when the revised MPN will be available.

We encourage guarantors and lenders to print and distribute the revised MPN as soon as possible to avoid confusion related to the use of two approved MPN forms during the upcoming processing year. Both the original and revised MPNs, however, are approved for use.

If a student submits the original MPN for processing, lenders and guarantors should process the loan. In this case, the guidance provided in DCL GEN-98-25 should be followed when editing item 11. If the student submits the revised MPN for processing, the guidance in DCL GEN-98-25 on loan processing continues to apply, except for that related to editing item 11.

I wish to thank the FFELP community for its guidance on the revised MPN form. We appreciate greatly the community’s quick response in supporting this change. If you have any questions related to the change to the MPN or this letter, please contact me or Pamela Moran at (202) 708-8242.


Sincerely,



Jeff Baker, Director
Policy Development Division
Office of Student Financial Assistance


Attachment A

Attachment B

Last Modified: 03/29/1999