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Federal Updates

Shoptalk Online 501, April 28, 2009

Federal Updates

ED announces approval of revised Stafford and PLUS MPNs and related forms

The newly revised Stafford and PLUS Loan Master Promissory Notes (MPNs) and their related documents have been approved by the Department of Education (ED) and the Office of Management and Budget (OMB) and are ready for implementation. The revised forms include the new benefits and requirements of The Higher Education Reconciliation Act of 2005 (HERA), the College Cost Reduction and Access Act of 2007 (CCRAA), the Ensuring Continued Access to Student Loans Act (ECASLA), and the Higher Education Opportunity Act (HEOA,) as well as final regulations issued on November 1, 2007 and October 23, 2008. This article discusses highlights of the changes to the forms and TG's implementation plans.

Logistics of implementing the revised Addenda and PLDs
Program participants are to discontinue using the current Stafford and PLUS addenda and Plain Language Disclosures (PLDs) and begin using the revised addenda and PLDs as soon as possible.

The revised Stafford and PLUS addenda must be used with the current versions of the Stafford MPN (OMB No. 1845-0006, exp. Date 02-29-2008) and PLUS MPN (OMB No. 1845-0069, exp. Date 03-31-2008) to inform borrowers of the statutory and regulatory changes to the terms and conditions of their loans until the revised Stafford and PLUS MPNs have been implemented. Each addendum includes a notation in the lower right hand corner that identifies the form number and expiration date of the MPN that the addendum should accompany. TG will begin replacing the current addenda with the revised addenda beginning immediately and concluding with TG Loans By Web™ implementation within the next month. The revised addenda will be phased out of TG products when we implement the revised MPNs this summer.

Lenders are to provide the revised PLDs to borrowers of subsequent loans under an existing MPN and to new borrowers who completed MPNs before the revised forms were available. Borrowers with existing MPNs who are not borrowing a subsequent loan may be advised of the changes to the terms and conditions of their loans through existing processes such as annual mailings, delinquency notices, Web sites, etc.

TG has posted the revised addenda and PLDs on TG Online at www.tgslc.org/forms/frms_addenda.cfm. The forms are available for download in a PDF format. Schools and lenders may photocopy these forms as needed.

Logistics of implementing the revised MPNs
ED has provided a transition period for implementing the newly revised MPNs beginning immediately and continuing through September 30, 2009. During this time, program participants may distribute the revised MPNs or the current MPNs with the appropriate revised addendum. Beginning October 1, 2009, only the new MPNs may be provided to borrowers, although previous versions of the MPNs should continue to be accepted for processing. The chart below provides a graphic representation of when to use each of the revised forms.

Which Form	When	Revised Addendum Required	Revised PLD Required
Current Stafford and PLUS MPNs	May be provided to a prospective borrower through September 30, 2009	Yes	Yes, if a subsequent loan is borrowed
	That were signed previously by an existing borrower or by a new borrower before the revised forms were available and in use	No*	Yes**
Revised Stafford and PLUS MPNs	May be provided to a new borrower immediately but must be provided on and after October 1, 2009	No***	Yes, if a subsequent loan is borrowed

* The borrower would have received the Addenda in effect at the time he or she signed the MPN and will receive a revised PLD through the lender's existing processes for providing PLDs.

** All borrowers receiving a subsequent Stafford or PLUS loan under an existing MPN after the date the program participant began using the revised PLDs must receive the appropriate revised PLD. Current borrowers who are not receiving subsequent loans under an existing MPN may be notified of changes to terms and conditions of their MPN through existing processes (such as notices to borrowers, annual borrower letters, websites etc.)

*** The newly revised MPNs contain all information provided in the newly revised Addenda.

TG plans to provide the revised MPNs in all of its products by early summer. At that time, the addenda will be discontinued as the revised MPNs will contain all of the new information.

TG is printing paper copies of the revised Stafford MPN and School Certification and the PLUS MPN, Endorser Addendum, and School Certification, and they will be available to program participants through the TG Online Request system in approximately three weeks at www.tgslc.org/forms/index.cfm.

Highlights of Changes to the Forms
First and foremost, there are no additional data elements to any of the forms. However, a concerted effort was made by the forms workgroup and the Department of Education (ED) to make the language on the MPNs consistent to the extent possible. This means there are minor wording changes throughout the forms to synchronize the language and to use the clearest, shortest, and most accurate version of existing approved language. The workgroups and ED also included carefully crafted language to meet new disclosure requirements to the extent possible.

Changes to the MPN include:

The phrase "or any accompanying document" was added in the Warning document header about making false statements or misrepresentations on the MPN.
Language explaining and supporting the government's fight on terrorism and money laundering and the effect it will have on borrowers was added in the document header.
A statement that references provided should have known the borrower for at least three years was added.
A reference to the Academic Competitiveness Grant (ACG) and the National Science and Mathematics to Retain Talent (SMART) Grant was added in the overpayment certifications.
A reference to a conviction or plea of guilty or no contest to a charge of fraud in securing Title IV funds was added in the repayment certifications.
Authorization to call a borrower at his or her cellular telephone number provided by the borrower and to use an automated dialing system and pre-recorded artificial or text message was added.
A statement that the lender may use a servicer was added to the disclosure section.
The term "guarantee fee" was changed to "federal default fee."
Information about income-based repayment and the application of payments under income-based repayment was added to the Repayment and Acceleration and Default sections in the MPN and the Rights and Responsibilities sections.
The term "credit bureau" was changed to "consumer reporting agency."
The legal notices were expanded and clarified to add information about inducements.
Information about reporting loans to the National Student Loan Data System and who will have access to that information for specific purposes was added to the Legal Notices section.

Changes to the Instructions and Important Notices sections include:

Instructions for completing the address field were expanded and made consistent with postal guidance.
Instructions for completing the telephone number were clarified to request the number at which the borrower can most easily be reached.
The privacy and financial notices were clarified and expanded to include additional disclosures about how information is used and to whom it is available.

Changes to the Borrower Rights and Responsibilities section include:

The names of older loans that are no longer available were removed from the FFELP list of loan types.
The requirement to complete the FAFSA was added to the Stafford MPN.
The requirement to sign a new MPN if requested to do so by the lender was added.
The Stafford loan limits discussion was clarified and expanded and the loan limit chart was updated.
Disbursement language was expanded and clarified.
The interest rate section was revised to reflect the change to a fixed interest rate.
Information limiting the interest rate that can be charged to certain borrowers under the Service members Civil Relief Act was added to the Interest Rate section.
The payment of interest section was reorganized and clarified and a section on interest capitalization was moved from the chart to a separate section of the Borrower Rights and Responsibilities.
An indication that additional information on repayment plans will be provided during exit counseling was added to the Repayment section.
New disclosure requirements when a loan sale or transfer occurs were added.
Information on special repayment arrangements and repayment benefit programs that are available now and that may become available were added. These include Information on a no-accrual-of-interest benefit for qualifying active duty military service, public service loan forgiveness, and educational awards.
Information on false certification due to identity theft was added to the Loan Discharge section.
Information on options for loan discharge due to total and permanent disability and requirements to obtain such a discharge were added to the Loan Discharge section.
Information on new PLUS deferments for at least half-time enrollment and for the 6-months following the end of at least half-time enrollment was added to the Deferment section.
Information on assignment of a loan to the Department of Education was added to the Consequences of Default section.
Information that a federal student loan will be identified as an education loan when reported to a consumer reporting agency was added.

Changes to the School Certification Form include:

The OMB approval information and the Paperwork Reduction Notice were added.
The certifications were reorganized and expanded.

More information
To access Dear Colleague Letter FP-09-04, visit http://ifap.ed.gov/dpcletters/FP0904.html.

For questions about the forms, contact TG customer assistance at (800) 845-6267, or send an e-mail message to cust.assist@tgslc.org.

ED reminds 2009-10 applicants to update estimated income information

On May 1, 2009, ED will send notifications to selected 2009-10 Free Application for Federal Student Aid (FAFSA) filers who indicated, or whose parent(s) indicated, that they completed the FAFSA using estimated income information. The notifications will ask applicants and their parents to compare their Student Aid Report (SAR) with information from their recently completed 2008 federal tax returns, and to make corrections as necessary; and to update the tax filing status questions even if all other income information on the FAFSA is correct.

Since many applicants provide estimated income information on the FAFSA, the goal of this notification is to prompt students and their families to correct FAFSA data if necessary, so that accurate information is used when determining a student's eligibility for aid. In many cases, the corrections that result from these notifications have a significant impact on the student's Expected Family Contribution (EFC).

The school's responsibility
In announcing the upcoming reminders, ED notes that the failure of an applicant to update his or her income and tax data after receiving a notification does not result in "conflicting information" nor does it, by itself, trigger the need to verify applicant data. Schools are not responsible for ensuring that updates or corrections are submitted, except under regular verification requirements or when issues of conflicting information arise.

In most instances conflicting information exists when income and tax information on a subsequent Institutional Student Information Record (ISIR) transaction differs from information on an earlier transaction. However, updating the tax return status field from "will file" to "already completed" is considered resolution of the conflicting information for such applicants.

More information
The full announcement, including the reminder notification schedule, file selection criteria, notification format, notification text, and ED contact information, is available on the Information for Financial Aid Professionals Web site at http://ifap.ed.gov/eannouncements/041609Notifi0910ApplRemindIRS.html.