Bulletin ID
DLB - 99 - 14
| PublicationDate: 3/1/99 BulletinID: DLB - 99 - 14 March 1999 DLB-99-14 Subject: Improvements to Federal Direct Stafford/Ford Loan Master Promissory Note for 1999-2000 Dear Colleague: Our Chief Operating Officer, Greg Woods, has listened to your concerns about the 1999-2000 Federal Direct Stafford/Ford Loan Master Promissory Note (MPN). In response to the issues you raised, he asked the Direct Loan Task Force, Direct Loan Policy, and Direct Loan Systems to develop new language and processes for the MPN in 1999-2000. We are pleased to announce two improvements: · MPN Item 8 now gives students information about reducing or canceling a loan; no loan amount is collected by the LOC. · We are modifying EDExpress to better manage the MPN printing and manifest processes. The Revised MPN Rather than providing a space for the student to enter a loan amount requested for the first academic period, the revised note will use the same space to inform the student of the right to cancel or request a lower loan amount for each academic period. The revised version of the MPN also reminds the student where to find additional information about reducing or canceling loans received. Item 8 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 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 8 on the Instructions and Notices page of the revised MPN will read: Item 8. Your school will notify you of the amount of Direct Subsidized and Direct Unsubsidized 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 school. Additional information is included under "Loan Cancellation" in the Borrower's Rights and Responsibilities statement. If you create your own notes, you may change the wording in Item 8 to be the same as on the revised MPN text. If you make this revision, you will also need to change the OMB NO. to 1840-0743 and change the expiration date to 09/30/99 at the top of each page where the OMB box currently appears. You must not change anything else on the note. The revised language for Item 8 must fit in the same Item 8 data block as on the original MPN. There can be no adjustments made to the size or location of this data block. Your revised MPN must go through the same review and testing process that was sent to you earlier by the LOC. Please follow these same procedures. You may begin using the revised MPN as soon as it is printed or, if you are a mainframe school, as soon as you modify your software. We expect to have the revised MPN available from the LOC by May 1. You will soon receive another Direct Loan Bulletin about ordering the revised notes. The process that enabled us to obtain quick approval of the revised MPN temporarily limits the use of the document to 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 You may continue to use the original MPN. Both the original and the revised MPN forms will be accepted by the Loan Origination Center (LOC). Because the information in Item 8 will no longer be used to process a Direct Loan, you may print the loan amount you approve in the $______.00 space in Item 8 if you use the original form. After April 2, 1999, the LOC will not reject any of the original MPNs because of the amount entered in Item 8. If you use the original MPN you may disburse up to the dollar amount that the borrower is eligible to receive, even if the student enters a lower amount in Item 8. You must document in your files the students request for the additional funds over the amount he or she entered in Item 8 on the MPN. LOC Processing Changes As stated above, both the original and the revised MPN forms will be accepted by the Loan Origination Center (LOC). The LOC will continue sending the Annual Combined Maximum Loan Amount in the Accepted Promissory Note field #14 on the Promissory Note Acknowledgement Record and on the Loan Origination Acknowledgement in field #7. The Loan Amount Requested, field #16 on the Promissory Note Acknowledgement and field #9 on the Loan Origination Acknowledgement Record, will be the Loan Amount Approved from the Loan Origination Record. Improvements to EDE Software EDExpress for 1999-2000 is being modified for the new MPN and should be distributed during the first two weeks in May. In addition to the changes relating to the Item 8 revision, the software is also being enhanced to allow you to better manage printing and manifesting MPNs. We will send you another Direct Loan Bulletin soon to explain those changes. New change pages will be written for the Direct Loan Technical Reference manual that will reflect the recent MPN modifications that we made in response to requests from Direct Loan schools. These pages should be available to you in early May. If you have questions or need additional guidance on technical and programming issues, call CPS Customer Service at 1-800-330-5947. For additional guidance on processing issues, call the LOC at 1-800-848-0978. Additional Information The revised MPN form and process change the circumstances in which a new MPN is required. For the 1999-2000 academic year, a new MPN is needed in the following three situations: · The student transfers to, or enrolls in, another school. · You will make more than four separate disbursements for a single loan type (subsidized or unsubsidized). · The student becomes eligible for a second annual loan because the student has completed one full academic year and is beginning a second academic year. (This situation is generally referred to as borrower-based academic year progression.) The plain English pamphlet that we have prepared to help you explain the MPN and the new loan process to students is being printed and should be available to you shortly. We look forward to working with you to continue to improve the delivery of Direct Loans to students and their families. I look forward to seeing you at the Direct Loan Conference on March 28-30. We hope that the changes described above address your concerns about the MPN in 1999-2000. Sincerely, Margaret E. White Acting Chair Direct Loan Task Force |