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Summary: HERA Operational Implementation Guidance (CPS, COD System, and EDExpress Suite) -- UPDATED GUIDANCE: Direct PLUS Loan for Graduate and Professional Students (Supersedes 5/16/2006 Electronic Announcement)

Publication Date: June 23, 2006

Author: G. Kay Jacks, General Manager, FSA Application, School Eligibility and Delivery Services

Summary: HERA Operational Implementation Guidance (CPS, COD System, and EDExpress Suite) -- UPDATED GUIDANCE: Direct PLUS Loan for Graduate and Professional Students (Supersedes 5/16/2006 Electronic Announcement)

Note: This Electronic Announcement was updated on August 10, 2006 by correcting the National Student Loan Data System (NSLDS) code for Direct PLUS Loans made to graduate and professional students. The correct code is "D3" and has replaced the incorrect code that was previously provided.

Posted on 06-23-2006

As explained in Dear Colleague Letter GEN-06-02, the Higher Education Reconciliation Act of 2005 (the HERA), Pub. L. 109-171, provides for eligible graduate and professional students to receive Federal Direct PLUS Loans (Direct PLUS Loans) on or after July 1, 2006. The HERA provision does not create a new loan program, but, rather, allows a new type of borrower-an eligible graduate or professional student-to borrow under the existing Direct PLUS Loan Program.

Effective July 1, 2006, we will have parent PLUS borrowers and graduate or professional student PLUS borrowers (Grad PLUS borrowers). Both parent PLUS borrowers and Grad PLUS borrowers will agree to repay Direct PLUS Loans by completing and signing the existing Federal Direct PLUS Loan Application and Master Promissory Note (PLUS MPN). An addendum to the PLUS MPN (Addendum) will provide specific instructions for completion of the MPN by Grad PLUS borrowers.

In an Electronic Announcement posted May 16, 2006, we provided information about awarding Direct PLUS Loans to Grad PLUS borrowers. Also in that announcement, we explained how we planned to implement functionality for processing Direct PLUS Loans for Grad PLUS borrowers. We have since determined that we can improve upon the original plan and schedule in the following ways:

  • Between now and August 12, 2006, certain processing functions along with interim school processing options will be in place to support Grad PLUS processing.
  • Beginning August 12, 2006, full Common Origination and Disbursement (COD) System functionality will be in place to support Grad PLUS processing.

This announcement and its attachments supersede the previous announcement and serve the following purposes:

  • To provide the updated implementation plan and schedule for Grad PLUS functionality.
  • To address requests for clarification of Grad PLUS award and processing information.
  • To provide informational materials that schools can provide to Grad PLUS borrowers.

In the announcement itself, we explain the updated availability of Grad PLUS functionality. Then, through attachments, we provide additional information about processing functions, information about loan terms and conditions, and materials for borrowers.

In this announcement, we cover information in the following order:

  • Updated Availability of Grad PLUS Functionality
  • Information for EDExpress Users
  • Explanation of Attachments
  • Contact Information
  • Attachments/Enclosures

Updated Availability of Grad PLUS Functionality

Grad PLUS Processing Overview

There are five basic steps involved in Grad PLUS processing:

  • A student completes a PLUS MPN via the Direct Loan Electronic MPN Web site or completes and returns a paper PLUS MPN to the school or to us, as applicable.
  • A credit check is initiated either by the school via the COD Web site or by the COD System upon receipt of an award.
  • A school provides information about its Grad PLUS loans to us via submission of the Extensible Markup Language (XML) Common Record to the COD System or via the COD Web site. In either case, the COD System returns responses to the school.
  • Once the COD System has an accepted award, approved credit check, valid PLUS MPN, and first actual disbursement on file, it "books" the loan and sends it to the Direct Loan Servicing System (DLSS).
  • After the loan is submitted to the DLSS, information about the loan is sent to and available in the National Student Loan Data System (NSLDS).

Between now and August 12, 2006, certain processing functions along with interim school processing options will be in place to support Grad PLUS processing.

Beginning August 12th, full COD System functionality will be in place to support Grad PLUS processing.

We cover the availability of Grad PLUS processing functions in the following order:

  • Processing Functions Available Now
  • Processing Functions Available July 1, 2006
  • Processing Functions Available August 12, 2006

Processing Functions Available Now

  • A Grad PLUS borrower can complete a paper PLUS MPN.
  • A school can initiate a credit check for a Grad PLUS borrower via the COD Web site (www.cod.ed.gov).
  • A school can view a Grad PLUS borrower's credit check decision via the COD Web site.

Processing Functions Available July 1, 2006

  • A Grad PLUS borrower will be able to complete the PLUS MPN via the Direct Loan Electronic MPN Web site (www.dlenote.ed.gov).
  • A school will be able to submit paper PLUS MPNs completed by Grad PLUS borrowers to us.
  • A school will receive unsolicited system-generated MPN Responses for paper and electronic PLUS MPNs completed by Grad PLUS borrowers. The school will be able to import these responses into its system.
  • A school will be able to confirm paper and electronic MPN acceptance, initiate credit checks, and/or receive credit check decisions for Grad PLUS borrowers by using the COD Web Site Option and/or the Spreadsheet Option outlined below.
  • A school will be able to access and disburse funds for Grad PLUS borrowers who do not have an adverse credit history.

    Note: A school will be able to complete processing for Grad PLUS borrowers who have an adverse credit history and obtain an endorser after full COD System functionality is available on August 12, 2006.

Between July 1, 2006 and August 12, 2006, a school may use the following processing options, separately or in combination, to confirm MPN acceptance, initiate credit checks, and/or receive credit check decisions for Grad PLUS borrowers:

COD Web Site Option

Using this option, a school can view the credit check decision and MPN status for a Grad PLUS borrower via the COD Web site (www.cod.ed.gov).

  • Checking status via the COD Web site must be done on an individual borrower basis.
  • A school can check the COD Web site itself or request the assistance of the COD School Relations Center.
  • If a school needs to complete these checks for a large number of Grad PLUS borrowers, the Spreadsheet Option will be more efficient.

Spreadsheet Option

Using this option, during the period July 1, 2006 through August 11, 2006, a school can request that a credit check be completed, receive the credit check decision, and receive MPN status for one or more Grad PLUS borrowers via a spreadsheet.

  • The spreadsheet template will be available on the COD Web site (www.cod.ed.gov) by July 1, 2006. We will announce the availability of the template in the "COD Processing Update" and via a COD Web Message.
  • We will include with the spreadsheet template comprehensive instructions that cover the following information:
    • How a school must complete the spreadsheet.
    • How a school must submit the spreadsheet in an encrypted and password-protected Zip file.
    • How and when we will return the spreadsheet to a school.
  • A school's spreadsheet data must be cumulative. Each time the school submits the spreadsheet to us, the spreadsheet must contain all information for each Grad PLUS borrower that has ever been included in the spreadsheet. If the school needs to update a Grad PLUS borrower's information, it will do so by changing the existing data for that borrower-not by adding a new row to the spreadsheet.
  • We will edit a school's spreadsheet data to ensure the following:
    • Origination Date is on or after July 1, 2006.
    • Grade Level is 6 or 7.
    • Award Amount is within reasonable limits.
    • First Disbursement Amount is less than or equal to Award Amount.
  • We will not enter a school's spreadsheet data into the COD System. The spreadsheet serves only as an interim means through which the school can receive PLUS MPN and credit check information for Grad PLUS borrowers. The school must submit all required data via Common Record or Web processing after full COD System functionality is available on August 12, 2006.
  • We will return the results of our edit checks, PLUS MPN status, and credit check decision via spreadsheet to a school.

Note: The last day that a school may use the Spreadsheet Option is August 11, 2006. The Spreadsheet Option will not be available after full COD System functionality is implemented on August 12, 2006.

Processing Functions Available August 12, 2006

  • A school will send origination and disbursement information about Direct PLUS Loans for Grad PLUS borrowers using the existing PLUS Common Record Block or by submitting individual records via the COD Web site.

    The Award ID and MPN ID associated with a Direct PLUS Loan for a Grad PLUS borrower will be constructed just as they are constructed for a parent PLUS borrower.

    • The Award ID will have a "P" in the 10th position.
    • The MPN ID will have an "N" in the 10th position.

    Note: A school may have followed our earlier guidance regarding the MPN ID and had Grad PLUS borrowers complete and sign paper PLUS MPNs with "R" in the 10th position of the MPN ID. In this case, the school does not need to collect new paper PLUS MPNs for the Grad PLUS borrowers. The school should submit the completed paper PLUS MPNs to us beginning July 1, 2006.

Parent PLUS and Grad PLUS awards will look alike except that Grad PLUS awards will have the following notable differences:

    • The information in each Person Common Record Block-the borrower's block and the student's block-will match exactly.
    • The student's Dependency Status will be Independent instead of Dependent.
    • The student's Grade Level will be 6 or 7 instead of 5 or lower.
  • We will modify how the COD System analyzes and edits information submitted using the Common Record or via the COD Web site to determine if the loan is for a parent PLUS borrower or a Grad PLUS borrower.
  • We will revise the 2005-2006 COD Technical Reference and the 2006-2007 COD Technical Reference to reflect our Grad PLUS processing approach when we post the last installment of HERA-related technical reference updates in late July 2006. We will post the technical reference updates to the Information for Financial Aid Professionals (IFAP) Web site (www.ifap.ed.gov) and announce the availability of the updates in the "COD Processing Update" and via a COD Web Message.

    Notes:

    1. At a minimum, we will process 2005-2006, 2006-2007, and 2007-2008 Direct PLUS Loans for Grad PLUS borrowers using this approach and functionality.

    2. The COD Common Record XML Schema Version 2.0e posted on June 15, 2006 (http://ifap.ed.gov/cod/0607CODXMLSchema.html) includes a DL Graduate PLUS Block. This block is reserved for future use and will not be used for 2005-2006, 2006-2007, or 2007-2008 award year processing. As such, a school should not use the DL Graduate PLUS Block for 2005-2006, 2006-2007, and 2007-2008 Direct PLUS loans made to Grad PLUS borrowers.

After full COD System functionality is available on August 12, 2006, a school will be able to complete the following Grad PLUS processing functions:

  • Submit awards and disbursements to the COD System via batch and Web.
  • Receive responses from the COD System.
  • Receive Grad PLUS data in existing reports and access award and disbursement data via the COD Web site.
  • Complete processing and disburse for students who have an adverse credit history and obtain an endorser.
  • Have the COD System initiate a credit check upon receipt of an award.
  • Have the COD System print and mail the PLUS MPN and Addendum to Grad PLUS borrowers or to the school upon receipt of an award.
  • Have the COD System print and mail the PLUS Disclosure Statement to Grad PLUS borrowers 30 days before the first anticipated or actual disbursement of the loan.
  • Have loans "booked" and sent to the DLSS. Loan servicing information will be mailed to Grad PLUS borrowers at this time.

    Note: The repayment period for a Direct PLUS Loan made to a Grad PLUS borrower will begin on the date of the final loan disbursement, and the first payment will be due within 60 days after the date of that final disbursement unless the student is eligible for a deferment.

  • Access loan information, coded as "D3," in the NSLDS.

Information for EDExpress Users

We will modify the 2006-2007 EDExpress software and the Direct Loan Tools product as follows:

  • On August 11, 2006, we will post an interim 2006-2007 EDExpress .dll file (patch) on the Federal Student Aid Download (FSAdownload) Web site (www.fsadownload.ed.gov). Download and installation of this .dll file will enable a school to create and submit Direct PLUS Loans for Grad PLUS borrowers using 2006-2007 EDExpress 2.0.
  • On September 1, 2006, we will post 2006-2007 EDExpress 3.0 Release to the FSAdownload Web site. This release will implement full Grad PLUS functionality in the EDExpress software.
  • Also on September 1, 2006, we will post a Direct Loan Tools .dll file on the FSAdownload Web site. Download and installation of this .dll file will upgrade Direct Loan Tools 6.0 as follows:
    • Allow a school to rebuild Grad PLUS records in 2006-2007 EDExpress 3.0.
    • Add totals for Grad PLUS awards to the Measurement Tools Report.

Explanation of Attachments

We provide additional information related to Grad PLUS processing in attachments to this announcement. The attachments cover additional information about processing functions, information about loan terms and conditions, and materials for borrowers.

Three attachments are intended for school reference. They enhance and update Grad PLUS processing and awarding information. These attachments are as follows:

  • "Grad PLUS MPN, Credit Check, and Drawdown/Disbursement Information"
  • "Awarding Direct PLUS Loans to Grad PLUS Borrowers"
  • "Viewing and Checking Electronic Copy of Eligibility and Certification Approval Report"

Two additional attachments are provided that a school may wish to make available to Grad PLUS borrowers (use of these attachments is optional). One answers many of the questions we have received about Direct PLUS Loans for Grad PLUS borrowers. The other explains paper PLUS MPN use and completion by Grad PLUS borrowers. These attachments are as follows:

  • "Questions and Answers About Direct PLUS Loans for Graduate and Professional Students"
  • "Direct PLUS Loan MPN Completion by Graduate and Professional Students"

Contact Information

We appreciate your continuing partnership in serving Grad PLUS borrowers. If you have any questions about this announcement, contact the COD School Relations Center at 800/848-0978. You may also e-mail CODSupport@acs-inc.com.

Last Modified: 06/22/2006