USA Funds Provides Tips for Managing the PLUS-MPN Process
USA Funds Services
The U.S. Department of Education has announced the final PLUS-loan Master Promissory Note (MPN) process. The Department's guidance indicates that the PLUS MPN may be used for Federal PLUS loans made for periods of enrollment beginning on or after July 1, 2003. It must be used for all Federal PLUS loans certified on or after July 1, 2004, regardless of the period of enrollment for which it is intended.
The new PLUS MPN is similar to the Stafford MPN in many ways, including its use as a note for multiple loans for the same borrower. USA Funds reminds schools and lenders; however, that the PLUS MPN differs from the Stafford MPN in some important ways, including the following:
- The PLUS MPN serves as both the application and the promissory note. The parent borrowers applies for the loan through the school and the PLUS-Application-MPN process. In contrast, with the Stafford MPN, borrowers apply for loans via the Free Application for Federal Student Aid (FAFSA).
- The Stafford MPN is valid for all loans that the student borrower may obtain for a period of up to 10 years, providing other conditions are met. The PLUS MPN, however, is valid only for loans made for a single dependent student. To obtain loans for another dependent student, the parent must complete a separate PLUS MPN.
- With the PLUS MPN, both schools and lenders must develop and document a process by which either party collects the parent borrower's requested loan amount. The party responsible for collecting the loan amount information must document and retain the loan amount requests. Schools and lenders also must document any borrower requests to adjust the requested loan amount. Schools may use the Federal PLUS Loan Information and School Certification Form to collect the requested loan amount. Schools and lenders also may use a separate loan amount request document, a parent response section in the financial aid award letter or a documented telephone or electronice request process.
- For PLUS MPN forms, the school must provide an electronic or paper loan certification. An electronic certification must include, at a minimum, the information included in the paper Federal PLUS Loan Information and School Certification Form.
- As with the Stafford MPN, the PLUS MPN is valid for new loans even if the student changes schools or the loan is obtained with the support of another guarantor. If the parent changes lenders, a new note must be completed.
- At any time, the school, borrower or lender may choose to obtain a new PLUS MPN.
- When using an MPN, if the parent obtain an endorser for a PLUS loan, the endorsement applies only to that particular loan. If the parent obtains new loans subsequent to the first endorsed loan, the parent must sign a new MPN and, if applicable, obtain an endorser signature for the subsequent loan. If the parent requests an adjustment to the loan amount on an endorsed loan, the lender must obtain a new PLUS MPN and Endorser Addendum.
The Department issued final guidance regarding the PLUS MPN process in Dear Colleague Letter (DCL) GEN-03-03. You may access the letter and other DCLs from the USA Funds website by visiting www.usafunds.org, and selecting "Loan Policy and Regulations" from the "Express Links" menu.