Subject: Implementation of Expanded Authority for Multi-Year Use of the Master Promissory Note

Dear Partner:

As announced in Dear Colleague Letter GEN-02-10 (November 2002), the Department of Education has expanded the authority for multi-year use of the Master Promissory Note (MPN) in the William D. Ford Federal Direct Loan (Direct Loan) and Federal Family Education Loan (FFEL) programs. Under the expanded authority, unless a school is specifically informed otherwise, all Direct Loan schools may allow their student borrowers (and their parent borrowers under the soon to be released PLUS MPN) to receive loans for subsequent academic years based upon a previously signed MPN (even if that MPN was signed before the effective date of the expanded authority). This bulletin explains how we will implement the expanded authority for multi-year use of the MPN in the Direct Loan Program.

1. Which Direct Loan schools are affected by the expanded authority for multi-year use of the MPN?

The expanded authority for multi-year use of the MPN affects only Direct Loan schools that are not four-year colleges or graduate or professional schools. Previously, these schools were not authorized for multi-year use of the MPN. However, under the expanded authority for multi-year use of the MPN, students who are attending schools that are not four-year colleges or graduate or professional schools (or their parents) may receive loans for subsequent academic years based upon a previously signed MPN.

Direct Loan schools that are four-year colleges or graduate or professional schools are not affected by the expanded authority for multi-year use of the MPN. These schools were previously authorized for multi-year use of the MPN.

2. When does the expanded authority for multi-year use of the MPN take effect?

The expanded authority for multi-year use of the MPN is effective beginning with any Direct Loan for the 2003-2004 year (a loan with an identification number that includes "04") that is processed after the 2.0 Release of the Common Origination and Disbursement (COD) System. More specifically, the date of the 2.0 Release of the COD System is the earliest that a Direct Loan school that is not a four-year college or graduate or professional school may be identified in the COD System as using the multi-year feature of the MPN for the purpose of linking loans for the 2003-2004 year.

3. Is a Direct Loan school that is not a four-year college or graduate or professional school required to use the multi-year feature of the MPN?

No.A school is not required to use the multi-year feature of the MPN and may continue to use the single-year feature of the MPN.

4. How does a Direct Loan school that is not a four-year college or graduate or professional school inform the Department that it would like to use the multi-year feature of the MPN?

If a school would like to use the multi-year feature of the MPN beginning on the date of the 2.0 Release of the COD System, the school must inform COD School Relations by phone at 800/848-0978 or by e-mail at CODSupport@acs-inc.com by March 14, 2003. This deadline date is necessary to allow enough time to set the multi-year/single-year feature of the MPN in the COD System prior to the 2.0 Release. On the date of the 2.0 Release of the COD System, the school will be identified in the COD System as using the multi-year feature of the MPN for the purpose of linking loans for the 2003-2004 year.

5. What will happen if a Direct Loan school that is not a four-year college or graduate or professional school does not inform the Department by March 14, 2003 that it would like to use the multi-year feature of the MPN?

On the date of the 2.0 Release of the COD System, the school will be identified in the COD System as using the single-year feature of the MPN for the purpose of linking loans for the 2003-2004 year.

6. May a Direct Loan school that is not a four-year or graduate or professional school inform the Department after March 14, 2003 that it would like to use the multi-year feature of the MPN?

Yes. A school may inform the Department after March 14, 2003 that it would like to use the multi-year feature of the MPN. The school would do so by informing COD School Relations by phone at 800/848-0978 or by e-mail at CODSupport@acs-inc.com. The date on which the school will be identified in the COD System as using the multi-year feature of the MPN for the purpose of linking loans for the 2003-2004 year will be determined by the Department and communicated to the school.

For more guidance related to multi-year use of the MPN, please refer to Volume 8 (Direct Loan and FFEL Programs) of the Student Financial Aid Handbook. For more information about the operational business rules related to Direct Loan Master Promissory Notes, please refer to the 2003-2004 COD Technical Reference Volume II, Section 1 (Full Participants) or Volume IV, Section 1 (Phase-In Participants). Both references can be found on IFAP at www.ifap.ed.gov and the technical reference is available for download at www.fsadownload.ed.gov. If you have any questions about this bulletin, please contact COD School Relations by phone at 800/848-0978 or by e-mail at CODSupport@acs-inc.com.

Thank you for your continued partnership in the Direct Loan Program.

Sincerely,

Jane Holman
Acting Director
Title IV Delivery
Schools Channel