Multi-Year Use of Master Promissory Notes by Schools

    The U.S. Department of Education recently released Dear Partner/Colleague Letter 02-10 which will allow most schools participating in the Federal Family Education Loan (FFEL) and the Federal Direct Loan (Direct Loan) programs to use the Master Promissory Note (MPN) as a multi-year note.  This letter can be found at http://www.ifap.ed.gov/dpcletters/Gen0210.html.  If you cannot print this DCL and would like a copy please contact Stacey Fabros at 801.321.7211.

    Since the inception of the MPN only four-year, graduate or professional schools were approved by the Secretary of Education to utilize the multi-year feature of the MPN.  This feature permits students (or parent borrowers under the soon to be released PLUS MPN) to receive loans for subsequent academic years based upon a previously signed MPN.  This provision is now extended to all participating FFEL and Direct Loan schools located in the United States unless a school is specifically informed otherwise.

    This new policy allows students who are attending schools that are not four-year colleges or graduate or professional schools (or their parents) to receive loans for subsequent academic years based upon a previously signed MPN even if that MPN was signed prior to the effective date of this policy change.

    Please note that this new authority is effective beginning with any FFEL loan that is certified by a school on or after March 1, 2003, regardless of the period covered by the loan.

    Schools and lenders are not required to use the multi-year feature of the MPN.  A school may decide that it wants all or some of its borrowers to continue to complete and sign a new MPN each year.  Similarly, a lender may require a borrower to sign a new MPN to receive an additional loan from that lender.  If a borrower changes lenders then the borrower must sign a new MPN.  Most importantly, individual borrowers always have the option of signing a new MPN.

    As a reminder, schools must develop a process to obtain the borrower's requested loan amount prior to certifying the loan.  Schools using the multi-year feature of the MPN are also required to establish a Notification or Confirmation process and provide documentation of that process or processes to each lender where loans are submitted.  As a service to the schools, Utah Higher Education Assistance Authority (UHEAA) will collect that information and make it available for all lenders using UHEAA as the guarantor.

    Under the Notification process, the proposed loan amount is provided to the borrower and the borrower is only required to take action if he/she wants to reject or make adjustments to the types and/or amounts of the loans.

    Confirmation is an action taken by the borrower to confirm the proposed types and amounts of loans or to request a specific loan amount.  An example of such action required might be to obtain the initials or signature of the borrower on an award letter.  Please refer to GEN-98-25 for further detail.

    If you have any questions regarding this Bulletin, please contact the UHEAA Policy and Training Department at 801.321.7166 or by e-mail to mjohnson@utahsbr.edu.