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Understanding FFELP Process Flows. Will Shaffner Keith Broadus Director-Business Development Technical Consultant MOHELA USA Funds Services. The Master Promissory Note.

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Understanding FFELP Process Flows

Will Shaffner Keith Broadus

Director-Business Development Technical Consultant

MOHELA USA Funds Services

the master promissory note
The Master Promissory Note

The school, the lender, or ED must provide the borrower a copy of the completed Master Promissory Note (MPN) and repayment information with the first disbursement of loan funds. Other notifications such as notification of disbursement of funds and the right to cancel.

The MPN is a contract for a student loan between a borrower (a student or a parent) and a lender (the federal government for Direct Loans, or participating lenders for FFELs). It can serve as a multi-year note at all domestic schools, unless notified otherwise.

the master promissory note1
The Master Promissory Note

The school needs to know the following information:

  • which lender the student has chosen
  • whether the lender participates in electronic processing or uses paper processing
  • For electronic processing, the school must know where to transmit the loan eligibility certification – to the lender or to a guaranty agency that will process the loan on behalf of the lender.
  • For paper processing, the school must know where to mail the Federal Stafford Loan School Certification.
  • Central Disbursing Agent (CDA) or lender must have a signed MPN and a notice of guarantee prior to disbursement
commonline
CommonLine
  • The “language”/backbone of FFELP processing
  • Implemented in 1995 by the NCHELP Electronic Standards Committee as a way to promote common file layouts for FFELP processing throughout the industry
  • CommonLine 4 is most used file type
    • CommonLine 5 and CommonRecord:CommonLine (XML)
  • Most commonly-used CommonLine file layouts
    • Application Send
    • Application Receive
    • Disbursement Roster
    • Change Send/Response
    • CommonLine M (Modification) Record-sometimes used in lieu of change files
    • Certification Request (used by lenders)
    • Can also support electronic Alternative Loan processing
process evaluation what s best for my school
Process Evaluation: What’s best for my school?
  • What is your school’s overall student service philosophy?
    • High-touch, personalized service
    • Student-enabled: allow students to serve themselves via web and VPN-like applications
  • Does my loan process emulate my school’s overall student service philosophy?
    • If not, where do we miss the mark?
  • How efficient is my loan process?
    • Is it as streamlined as I think it is?
    • How do I look for inefficiencies?
    • How do I remedy those inefficiencies?
    • Where/how does default prevention and financial literacy fit in to our process?
process evaluation what s best for my school1
Process Evaluation: What’s best for my school?
  • Staffing
    • Will staffing needs change as a result of this evaluation?
    • How do I manage these changes?
  • Technical Support
    • How much support will I have from my IT/Web Master/FAMS vendor if system and web-based changes need to be made?
    • Where does my office fit in the campus pecking order for IT resources?
    • What’s my timeframe for getting these changes implemented?
  • FFELP partners
    • How accommodating will they be to my changes?
    • Am I evaluating my process due to changes mandated by them?
  • Other evaluation criteria?
school initiated process
School-Initiated Process

4. Notification sent to borrower to complete MPN via Internet.

1. Notify student of eligibility.

2. Certify loan on FAM system

3. Loan certification sent to guarantor

Guarantor

School

Response file

Response file

5. EFT and disbursement information sent to school.

Lender

borrower initiated process
Borrower-Initiated Process

1. Notify student of eligibility.

2. Student completes MPN via Internet or paper.

3. Notification of signed MPN sent to school.

4. Loan certification information sent to Guarantor.

Guarantor

School

5. Response file sent to school and lender.

6. EFT and disbursement information sent to school.

Lender

guarantor flow process
Guarantor Flow Process

4. Notification sent to borrower to complete MPN via Internet or paper.

1. Notify student of eligibility.

2. Loan certification information sent to Guarantor.

Guarantor

School

3. Response file sent to school and lender.

5. EFT and disbursement information sent to school.

Lender

lender flow process
Lender Flow Process

2. Student completes MPN via Internet or paper.

1. Notify student of eligibility.

3. Notification of signed MPN sent to school.

4. Loan certification information sent to Lender.

School

6. EFT and disbursement information sent to school.

Lender

5. Loan certification information sent to Guarantor for guarantee. Response file sent to Lender and school.

Response file

Guarantor

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