Informed Borrowing Confirmation: Modification of Approved Master Promissory Note Confirmation Processes – Operational Impacts to Schools and Preliminary COD System Information

Federal Student Aid
Informed Borrowing Confirmation: Modification of Approved Master Promissory Note Confirmation Processes – Operational Impacts to Schools and Preliminary COD System Information

In this announcement, we are informing schools of a change to our approved Master Promissory Note (MPN) confirmation processes. Under Section 432(m)(1)(D)(i) of the Higher Education Act of 1965, as amended, students and parents may receive multiple Direct Loans under a single MPN through a confirmation process that we approve. Since the introduction of the MPN, we have permitted schools to have either an active or passive MPN confirmation process for Direct Subsidized Loans and Direct Unsubsidized Loans and have required schools to have an active confirmation process for Direct PLUS Loans. An active confirmation process requires a student or parent to take action to accept a loan made under an MPN before the school can disburse any loan funds. A passive confirmation process permits a school to disburse a loan after notifying the borrower that the loan will be made, unless the borrower requests otherwise by a deadline specified by the school.

All MPN confirmation processes will now require student and parent borrowers to view how much they currently owe in federal student loans, and to acknowledge that they have seen this amount before a school can make a first disbursement of the first Direct Loan that a student or parent borrower receives for each new award year.

The new component of the approved MPN confirmation processes, called the “Informed Borrowing Confirmation” process, will be implemented on our website. Because the new process will be managed by Federal Student Aid, it does not require schools to change their MPN confirmation processes. However, as discussed below, there are operational impacts to schools as a result of this change. The Department of Education’s Informed Borrowing Confirmation process must be completed once each award year for the first loan a borrower receives for that award year, starting with loans associated with the 2020–21 Award Year.

This is the first in a series of announcements that will provide operational information about the changes to Direct Loan processing to incorporate the new Informed Borrowing Confirmation process. In this first announcement, we explain early operational impacts to schools and provide preliminary information about the changes planned for the Common Origination and Disbursement (COD) System implementation in April 2020. We hope this information will assist schools and software vendors as they begin preparing for the changes.

We will continue to post additional operational guidance as it becomes available.

School-Based Operational Impacts

Schools will need to consider the new process as they approach the April 2020 implementation date. Some early operational changes a school may need to consider include:

  • Modifications to School Websites and Paper Materials – Schools that provide general information about Direct Loan requirements on school websites or in paper materials may need to update this information to reflect the new process. The new Informed Borrowing Confirmation process applies to all Direct Loan borrowers, regardless of any other confirmation requirement that may have already been completed, and it must be completed before a borrower can receive his or her first Direct Loan for an award year.

  • Modifications to Internal Processes and Procedures – Schools will need to update internal processes and procedures to ensure that the new Informed Borrowing Confirmation process has been completed before the school makes a first actual Direct Loan disbursement (Disbursement Release Indicator (DRI) = True) of the first loan that a borrower receives for an award year. However, origination records and anticipated disbursement information can be submitted before the confirmation process has been completed. In addition, schools should begin to prepare updates to their systems and software to receive the new Informed Borrowing Confirmation information, as described below under “COD System Operational Impacts.”

Note: The Informed Borrowing Confirmation process is an addition to the existing MPN confirmation processes that we have approved and does not fulfill the entrance counseling requirement for first-time student Direct Loan borrowers or the PLUS credit counseling that is required for certain Direct PLUS Loan borrowers.

COD System Operational Impacts

Federal Student Aid is still analyzing system requirements and business rules. More information about the April 2020 COD System changes related to the Informed Borrowing Confirmation process will be provided at the 2019 Federal Student Aid Training Conference and in forthcoming electronic announcements; however, some key points about the expected changes are provided below:

  • Schools will receive three new tags (<InformedBorrowingComplete>, <InformedBorrowingCompletionDate>, and <InformedBorrowingID>) to indicate whether a borrower has completed the Informed Borrowing Confirmation process and can receive loan funds. These tags will be provided to schools in a number of ways:

    • Returned in the Direct Loan response block in Common Record responses

    • Returned in a new system-generated Informed Borrowing Confirmation response (CRxx, full message class still being determined)

    • Displayed on the COD Web Site (at the person level)

    • Added to the Direct Loan Rebuild file

    Note: Schools must implement COD Common Record Schema version 4.0d to receive the tags and responses associated with the Informed Borrowing Confirmation process. Schools can refer to an October 30, 2019 posting for more information about the new schema version.

  • Schools will receive a new COD Reject Edit 225 on submitted Direct Loan disbursements if the Informed Borrowing Confirmation process has not yet completed by the borrower.

Additional information about COD System changes related to the Informed Borrowing Confirmation process will be available in the 2020–21 COD Technical Reference posted on the IFAP website (planned for late November 2019). We are also planning a webinar in early 2020 to discuss the new Informed Borrowing Confirmation process. A training announcement will be posted at a later date providing details about the webinar.

Note for EDExpress Users: EDExpress for Windows 2020–2021, Release 2.0, scheduled for release in spring 2020, will be updated for the Informed Borrowing Confirmation process. We will communicate EDExpress Release 2.0 information through forthcoming electronic announcements on the IFAP website.

Contact Information

If you have questions about this announcement, contact the COD School Relations Center at 1-800-848-0978. You may also email

Last Modified: 11/20/2019