MINNEAPOLIS, MN OCTOBER MASFAA: TIME TO REFOCUS Understanding FFELP Process Flows Will ShaffnerKeith Broadus Director-Business DevelopmentTechnical Consultant MOHELAUSA Funds Services

MINNEAPOLIS, MN OCTOBER MASFAA: TIME TO REFOCUS 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.

MINNEAPOLIS, MN OCTOBER MASFAA: TIME TO REFOCUS 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

MINNEAPOLIS, MN OCTOBER MASFAA: TIME TO REFOCUS 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

MINNEAPOLIS, MN OCTOBER MASFAA: TIME TO REFOCUS 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?

MINNEAPOLIS, MN OCTOBER MASFAA: TIME TO REFOCUS 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?

MINNEAPOLIS, MN OCTOBER MASFAA: TIME TO REFOCUS School-Initiated Process School Guarantor Lender 1. Notify student of eligibility. 2. Certify loan on FAM system 3. Loan certification sent to guarantor 4. Notification sent to borrower to complete MPN via Internet. Response file 5. EFT and disbursement information sent to school.

MINNEAPOLIS, MN OCTOBER MASFAA: TIME TO REFOCUS Borrower-Initiated Process School 1. Notify student of eligibility. Guarantor 2. Student completes MPN via Internet or paper. 3. Notification of signed MPN sent to school. 4. Loan certification information sent to Guarantor. Lender 5. Response file sent to school and lender. 6. EFT and disbursement information sent to school.

MINNEAPOLIS, MN OCTOBER MASFAA: TIME TO REFOCUS Guarantor Flow Process School 1. Notify student of eligibility. Guarantor Lender 2. Loan certification information sent to Guarantor. 4. Notification sent to borrower to complete MPN via Internet or paper. 3. Response file sent to school and lender. 5. EFT and disbursement information sent to school.

MINNEAPOLIS, MN OCTOBER MASFAA: TIME TO REFOCUS Lender Flow Process School Lender Guarantor 1. Notify student of eligibility. 4. Loan certification information sent to Lender. 2. Student completes MPN via Internet or paper. 3. Notification of signed MPN sent to school. 5. Loan certification information sent to Guarantor for guarantee. Response file sent to Lender and school. Response file 6. EFT and disbursement information sent to school.

MINNEAPOLIS, MN OCTOBER MASFAA: TIME TO REFOCUS Midwest Association of Student Financial Aid Administrators Questions?