# Presentation: 758077

## Slide 1

## Implementation of the Federal Perkins Loan Program Master Promissory Note (MPN)

Gail McLarnon
U.S. Department of Education

Ralph Hosterman
 Penn State University

**Gail McLarnon**
**U.S. Department of Education**
**Ralph Hosterman**
** ****Penn State University**

## Implementation of  the Federal Perkins Loan MPN

- This presentation covers Department of Education policy on the use of the Federal Perkins Loan Program Master Promissory Note (MPN) and the implementation of a multi-year, electronic MPN at Penn State University

## ED Policy Guidance on Perkins MPN

- Spring 2002 Negotiated Rulemaking provided for use of Perkins MPN
- Section 674.2 – Definitions
- Modified definition of “making of a loan” – “when the institution makes the first disbursement of a loan to a student for an award year
- Add definition of “MPN” – “A promissory note under which the borrower may receive loans for a single award year of multiple award years

## ED Policy Guidance on Perkins MPN

- Spring 2002 Negotiated Rulemaking
- Sec. 674.16 – Making and disbursing loans
- Modified Sec. 674.16(d) to require “legally enforceable promissory note for each loan” and eliminated requirement for the borrower’s signature each award year
- Added Sec. 674.16(d)(3) – conditions under which Perkins MPN expires

## ED Policy Guidance on Perkins MPN

- Spring 2002 Negotiated Rulemaking
- Sec. 674.19 – Fiscal procedures & records
- Sec. 674.19(e)(4) requires an institution to electronically store e-signed notes and be able to retrieve an electronically stored note in a coherent format
- Requires institution to return the original or a true and exact copy of note marked “paid in full” or otherwise notify borrower in writing that the loan is paid in full

## ED Policy Guidance on Perkins MPN

- NPRM – August 6, 20002
- _[http://ifap.ed.gov/fregisters/FR0806200205.html](http://ifap.ed.gov/fregisters/FR0806200205.html)_
- Final regulations – November 1, 2002
- _[http://ifap.ed.gov/fregisters/FR1101200203.html](http://ifap.ed.gov/fregisters/FR1101200203.html)_
- Effective date July 1, 2003

## ED Policy Guidance on Perkins MPN

- MPN approved by OMB-June 12, 2003
- Expiration June 30, 2006
- MPN Posted to IFAP website
- Dear Colleague CB-03-11, July 17, 2003
- _[http://ifap.ed.gov/dpcletters/CB0311.html](http://ifap.ed.gov/dpcletters/CB0311.html)_
- Dear Colleague CB-03-13, Aug. 17, 2003 (electronic MPN)
- _[http://ifap.ed.gov/dpcletters/CB0313.html](http://ifap.ed.gov/dpcletters/CB0313.html)_

## ED Policy Guidance on Perkins MPN

- Implementation Guidance
- Dear Colleague CB-03-14, Aug. 8, 2003
- _[http://ifap.ed.gov/dpcletters/CB0314.html](http://ifap.ed.gov/dpcletters/CB0314.html)_
- Replaces current note after transition
- Implementation Dates:
- Optional for new loans on or after 7/1/03
- Required for new loans made on or after 11/1/04

## ED Policy Guidance on Perkins MPN

- Perkins MPN does not change the lending process:
- Determine borrower eligibility
- Ensure a signed prom note covers loan
- Provide loan disclosures/notices under Sec. 674.16(a) and Sec. 668.165(a) (can be provided electronically through a secure website)
- Disburse, service and collect

## ED Policy Guidance on Perkins MPN

- Options for MPN Use:
- School chooses annual or multi-year use
- Annual note:  Borrower signs once each year for all loans made that year
- Multi-year:  Borrower signs on MPN for all loans made until the note expires
- Borrower must notify school in writing if s/he wants no further loans under multi-year MPN

## ED Policy Guidance on Perkins MPN

- MPN Expiration Provisions-No further loans made under MPN after earliest of:
- The date school receives borrower’s written request for no further MPN loans
- 12 months after signature date if no disbursement has been made under MPN
- 10 years after signature date or date of school’s receipt of MPN

## ED Policy Guidance on Perkins MPN

- MPN format and text cannot be changed [except bracketed text]
- MPN requires subsidiary record of disbursements and adjustments
- Use of electronic MPN in accordance with ED E-Signature Standards
- Dear Colleague GEN-01-06, May 2001
- _[http://ifap.ed.gov/dpcletters/gen0106.html](http://ifap.ed.gov/dpcletters/gen0106.html)_

## Implementation of the Federal Perkins Loan Program Master Promissory Note

Ralph Hosterman
Penn State University

**Ralph Hosterman**
**Penn State University**

## Standards for Electronic Signature

-    Document – “Standards for Electronic Signature” (revised as of July 25, 2001)
- http://ifap.ed.gov/dpcletters/attachments/gen0106Arevised.pdf

## Standards for Electronic Signature

- Worked with the following Penn State offices in obtaining policies & procedures to determine if PSU met the standards:
- Admissions
- Center for Academic Computing (CAC)
- Office of Student Aid
- Registrar
- Security Office
- Student ID Office
- Office IT Staff
- Central IT Staff
- Internal Auditors

## Standards for Electronic Signature

- Gathered information and policies and procedures from offices in regards to the process of verifying or changing Name, SSN, and date of birth
- Admissions
- Registrar
- Office of Student Aid

## Penn State Authentication Process

- Student ID Card process:
- Freshmen Testing – students directed to Student ID Office
- Must bring photo ID (Driver’s License, Passport)
- Students asked for social security number
- Photo is taken for the Student ID.  Image is stored on database
- Student issued ID.  ID has photo and student’s name on front of card.  Magnetic stripe on back of card has SSN embedded

## Penn State Authentication Process

- Computer Access Account Process
- Student is directed to computer access account signature station
- Student swipes Student ID and is prompted to enter date of birth
- If date of birth matches our database the student is prompted to sign an agreement accepting electronic services and agreeing to computer usage and security policies
- Not to share their password
- Notify officials if password is compromised
- Consequences if policy is violated
- The agreement and signature is electronically imaged
- The student is issued a User ID and Password

## Perkins Master Promissory Notes Signed - 2003-04

## Mainframe Changes

- Awarding – Future semester awards for students who signed master prom note
- eLion Student Aid Summary – Direct students to electronic signature web-site
- Promissory Note creation process:
- To not create paper notes for students
- To invite students with Penn State accounts to choose method of signing (Paper/e-Note)
- To create Master Promissory Notes (MPN) for Perkins
- Manually print paper notes for students choosing not to sign electronically
- Control reports revised for updating student signature

## Mainframe Changes

- MPN Dates
- Created
- Signed
- Expires
- MPN expiration procedure
- Cancel Create Date
- Loan Disclosure Notice - Regulation 34 CFR 674.16(a)
- Notification of Disbursement – Regulation 34 CFR 668.165(a)
- Loan Disbursement  (System disbursements and manual disbursements)
- Loan Decreases/Cancels
- Paid in Full/Assignments – (Future enhancement)

## Penn State eSignature Perkins Master Promissory Note Process

## Awarding / Aid Summary

- Awarding procedure reviews MPN Signed date and Expiration date
- MPN is signed and expiration date is greater than current date + 3 months - award is processed for disbursement
- MPN is not signed or expiration date is less than current date + 3 months - award is processed for note creation.

## Loan Disclosure Notice

- email sent to students directing them to web-site (different: signed MPN / unsigned MPN)
- Web-site provides information specific to their Perkins Loan –Regulation 34 CFR 674.16(a)
- Student Loan Disclosure Statement
- Repayment Schedule

## Note Creation

- Nightly procedure extracts loan information
- Create date updated
- Email invitation generated

## Promissory Note Invitation

- e-mail sent to students with an active Penn State Access Account inviting them to sign their promissory note electronically
- Student notified to have specific information ready before beginning the e-Note process:
- Borrower’s permanent address, e-mail address, and phone number
- Borrower’s drivers license number
- Names, addresses, and phone numbers of two other adults, etc.

## e-Sign Web Application

- http://www.studentloans.psu.edu/pdf/enote.pdf

## Comments, Feedback and Contact Information

- Name:  Ralph Hosterman
- Phone:  (814) 865-4924
- Fax:      (814) 865-6535 (fax)
- Email:    _[rrh2@psu.edu](mailto:rrh2@psu.edu)_

## Comments, Feedback and Contact Information

- Name:  Gail McLarnon
- Phone:  (212) 219-7048
- Fax:      (212) 502-7874
- Email:    _[gail.mclarnon@ed.gov](mailto:gail.mclarnon@ed.gov)_