Bulletin ID
DLB - 97 - 7
| PublicationDate: 2/1/97 BulletinID: DLB - 97 - 7 February 1997 DLB-97-7 SUMMARY: Instructions for ordering Direct Loan promissory notes for the 1997-98 academic year; guidance for use of Year 3 (1996-97) and Year 4 (1997-98) promissory notes; and Year 4 changes to Direct Loan promissory notes and borrower's rights and responsibilities Dear Colleague: Preparations for Year 4 of the William D. Ford Federal Direct Loan (Direct Loan) Program are well underway! We know that many of you have been waiting for promissory notes (Pnotes); these documents are ready for distribution. This bulletin provides instructions for ordering Year 4 Pnotes, sets forth guidance on the use of Year 3 and Year 4 Pnotes and identifies Year 4 changes to Direct Loan Pnotes and Borrower Rights and Responsibilities. Ordering Instructions for Year-4 Promissory Notes Copies of the 1997-98 Direct Loan Pnotes are enclosed. Also enclosed is an order sheet for: - Direct Stafford/Ford Loan Promissory Notes (pin fed and single sheet versions) Direct PLUS Loan Promissory Notes - Direct PLUS Loan Promissory Note Instructions. (PLUS instructions are separate from the note and must be ordered if needed; Direct Stafford/Ford instructions are part of the Pnote and need not be ordered.) - Direct PLUS Loan Promissory Note Addendums (Endorser) - Direct PLUS Loan Promissory Note Addendum (Endorser) Instructions - Direct Stafford/Ford Borrower's Rights and Responsibilities - Direct PLUS Borrower's Rights and Responsibilities Page 2 - DLB-97-7 Guidance on the use of Year 4 (1997-98) Pnotes Schools may immediately begin using Year 4 Pnotes to make loans. This means that schools may use Year 4 notes to make Year 3 loans. The Year 4 notes are fully compatible with the Year 3 software. Guidance on the use of Year 3 (1996-97) Pnotes Schools may continue to use Year 3 Pnotes, even after the availability of Year 4 Pnotes. HOWEVER, BECAUSE OF THE CHANGE IN THE WAY THE INTEREST RATE WILL BE CALCULATED AS OF JULY 1, 1998, YEAR 4 PNOTES MUST BE USED FOR LOANS FIRST DISBURSED ON OR AFTER JULY 1,1998. Please note that requests for Year 3 Stafford Pnotes (Pin-fed and Single Sheet) are being filled with Year 4 Pnotes. Just recently, the Department of Education ordered a reprint of Year 3 Stafford Pnotes. However, it has been brought to our attention that these Year 3 Pnotes, distributed from the Direct Loan Distribution Center between December 10, 1996 and January 24, 1997, are potentially misaligned. Once we learned of this, we ceased to distribute Pnotes from this stock. Since Year 4 Pnotes are available and can be used to book Year 3 loans, we will fill Year 3 Stafford Pnote orders with Year 4 Pnotes. Schools that received Year 3 Stafford Pnotes from the Distribution Center between December 10, 1996 and January 24, 1997 will be contacted by our School Relations staff to assess the need for a replacement shipment. You will be given the option of having the entire shipment sent overnight or having a partial shipment sent overnight, followed by the remaining order in three to four days. 1997-98 Changes to Direct Loan Pnotes Changes to Stafford/Ford Pnotes only: - The interest rate data element was eliminated and replaced by text that notifies the borrower that the interest rate is variable. (See: page 1 of the Pnote.) - A repayment information section was added. (See: Disclosure of Terms on page 2 of the Pnote.) Changes to the PLUS Pnotes only: - Students agree to notify the school of borrower's permanent and total disability or death. (See: Section B on page 1 of the Pnote.) Page 3 - DLB-97-7 Changes to both the Direct Stafford/Ford and PLUS Pnotes: - There is a change in the variable interest rate calculation for all loans first disbursed on or after July 1, 1998. (See: Interest Rate Section in the Disclosure of Terms on page 2 of the Pnote.) - The borrower must report address and status changes. (See Acceleration and Default section of Disclosure of Terms.) 1997-98 Changes to Borrower's Rights and Responsibilities Information Changes to both Direct Stafford/Ford and PLUS Rights and Responsibilities: - Added information about the variable interest rate calculation change for all loans first disbursed on or after July 1, 1998. (See: Interest Rate Section.) - Added information about the student's and parent's right to cancel all or a portion of the loan within 14 days after the date the school sends the borrower the disbursement notice, or by the first day of the payment period, which ever is later. (See: Loan Cancellation Section.) Changes to PLUS Borrower's Rights and Responsibilities Only: - Forbearance will not be granted for the following circumstance: service in a national service position for which the borrower received a national service education award under the National and Community Service Trust Act of 1993. (This circumstance was included in the forbearance section for the Year 3 PLUS Borrower's Rights and Responsibilities document, but because it is not an eligible category, it has now been removed.) Please note that if you develop your own Pnotes, you must have them REVIEWED AND APPROVED by your Direct Loan Regional Account Management Staff prior to use. If you choose to include a school bar code on the Pnotes you print for borrowers, prior approval from the Department is not necessary. However, the bar code may not be placed in the bottom margin of the note. The entire margin is reserved for use by the Department's processor. Thank you for your continued support of the Direct Loan Program. Sincerely, Joe L. McCormick, Chair Direct Loan Task Force Attachment |