FFELP and DL Update
MPN Veterans Share Tips for the Transition
by Tom Quinn, Vice President for USA Group

The deadline to implement the Master Promissory Note (MPN) is fast approaching, and those who already have made the transition say being prepared can make the process a smooth one for your school.

The MPN must be used in place of the existing Common Federal Stafford Application and Promissory Note for loan periods beginning on or after July 1, 2000. The form also must be used for loans certified on or after that date. But some schools opted to get a head start by using the MPN in the 1999-2000 school year.

Representatives of several of those pioneering schools shared with USA Group® the lessons they learned through months of experience using the MPN. Their tips to schools making the transition to the MPN in July 2000 include:

1. Allow plenty of time to prepare. Work with students, financial aid staff, lenders, and other servicers to start the education process as early as possible.
2. Be vigilant in keeping students informed about the process. Employ as many techniques as possible to familiarize students with the MPN process. One school distributed brightly colored letters and other attention-getting materials to students and found written reminders also were necessary.
3. Remember that first-time borrowers have a different perspective on the MPN. Freshmen and other first-time borrowers have not applied for loans in the past, so when they use the MPN they won't have to adapt to a change in the loan process. A school that implemented the MPN primarily for freshmen during the 1999-2000 year did not receive many questions about the new form.
4. Make the MPN's options clear to students. At one school, students worried that signing just one MPN for up to 10 years of student loans would leave them with no control over their debt. They were concerned about signing a 10-year note for what might be only four or five years of education loans. School representatives assured students they would continue to get their loans without signing a promissory note each year. They also assured students that when they leave school or graduate they can revoke the note if they choose.
5. Tout the ways the MPN can streamline the loan process for students. The prospect of completing one promissory note for all their Stafford loans likely will outweigh any concerns students have about the MPN process.