The Master Promissory Note for Direct Loan Schools

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What is an MPN?
HPromissory note used to make one or more loans for one or more academic years (AYs)-– Currently for sub/unsub loans only – Loan amounts may be adjusted upward within same AY without new MPN – Single-year and multi-year use for originating new loans
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Related MPN Documents
HDisclosure Statement
– Provided at or before first disbursement of each loan under MPN

HBorrower’s Rights and Responsibilities
– Provided with each MPN

HPlain Language Disclosure
– Provided with Disclosure Statement for subsequent loans under MPN
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Single-Year Use
HOne or more loans for same AY made under one MPN-– All schools eligible – Need new MPN each AY – Need new MPN for all transfer students

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Multi-Year Use
HLoans for more than one AY made under one MPN-– 4-YR and graduate/professional schools currently eligible – Do not need new MPN each AY – Need new MPN for transfer students without Direct Loan MPN – Must have confirmation process for loans in subsequent AYs
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M-Y Use

Eligible Schools
H“Highest Educational Program Offered” on page A-2 of ECAR is-– Master’s Degree or Doctor’s Degree – First Professional Degree – Professional Certification – Bachelor’s Degree

HNot subject to emergency or LS&T action
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M-Y Use

Confirmation: Development
HConfirmation process-– Replaces signing MPN for loan in new AY – Ensures borrower control and increases borrower understanding of loan debt – Is determined by school – May be part of--or can supplement-existing required notices/disclosures – May be active or passive
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M-Y Use

Confirmation: Active Process
HBorrower must take action to accept/confirm loan HSchool may not disburse until borrower responds Examples:
– Signed award letter – Electronic acceptance through PIN
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M-Y Use

Confirmation: Passive Process
HBorrower takes action only to reject or change loan HSchool may disburse after notifying Examples:
– Award letter with no signature required – Disclosure Statement
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M-Y Use

Confirmation: Multiple Processes
HGeneral-– School should use same process for all students

HIn some cases-– Administrative procedures and/or school’s best judgement on informing students of loan obligation may require more than one process
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M-Y Use

Confirmation: Multiple Processes
Example:
H Undergraduates required to attend individual counseling before receiving aid H Graduate students not required to attend counseling H School may have two processes-– Counseling for undergraduates – Different process for graduate students

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M-Y Use

Confirmation: Documentation
HSchool must retain documentation of process(es) in effect for each AY in which it makes subsequent loans under MPNs Describe process(es) in student handbook or other financial aid publication each AY
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Ideal

M-Y Use

Confirmation: Documentation
HDocumentation-– May be kept in paper or electronic format – Need not be kept in borrower files – Must be kept indefinitely – Must be submitted to ED upon request if borrower challenges loan enforceability

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M-Y Use

Canceling Authorization for Multi-Year Use

HBorrower must provide written cancellation notice to DLSC or school HIf borrower cancels-– Remaining disbursements on existing loans accepted – Additional loans require new MPN

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Ways to know if LOC has a valid MPN
HFor 1999-2000 and 2000/2001
– NSLDS – LOC sends an origination record back with the MPN ID

HFor 2001/2002
– There will be a flag on the ISIR record

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MPN Processing 1999/2000
HWhen a new 1999/2000 loan is originated, it will be linked to the most recent MPN on file at the LOC HA new MPN does not need to be sent for new 1999/2000 loans

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MPN Processing
600,000 500,000

400,000

300,000

200,000

100,000

0
Jun98 Jul-98 Aug98 Sep98 Oct98 Nov98 Dec98 Jan99 Feb99 Mar99 Apr99 May99 Jun99 Jul-99 Aug99 Sep99 Oct99 Nov99 Dec99 Jan00 Feb00 Mar00 Apr00 May00 Jun00

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Loan Origination Contacts
HE-Mail Address:
– loan_origination@mail.eds.com

HSchool Relations at the LOC:
– 1-800-848-0978

HSchool Relations Fax:
– 1-800-557-7396

HSchool Relations at the Servicing Center:
– 1-888-877-7658
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