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ATTACHMENT B: RIGHTS AND RESPONSIBILITIES OF A BORROWER WHO USES THE MPN The Master Promissory Note process has been designed to maintain the student’s ability to be in control of his or her educational borrowing by being an informed borrower and by having opportunities to cancel or modify approved loan amounts. For the initial loan period under an MPN, the borrower requests a specific loan amount by completing Item # 11 on the MPN. For loans made under the multi-year process, the school and lender are required to have established and to have used a notification or confirmation process (es) that informs the borrower of the proposed types and amount of student loans being awarded for the loan period. (See Attachment C for more information). Borrowers are also protected and kept informed through the disclosures required of the lender by the HEA and by the school notification requirements of the regulations at 34 CFR 668.165. Additional disclosure information is provided to the borrower by the lender in accordance with 34 CFR 682.205 and 682.207. These requirements are designed to keep the student informed of his or her accumulating debt, eligibility for additional loans, and whether and when loan proceeds were credited to the student’s account at the school. The student also has the opportunity to decline all or a portion of the loan within time frames established in the regulations. Both the MPN and the Borrower’s Rights and Responsibilities form (See Attachment F) contain information on the cancellation or reduction of loan amounts by borrowers. It is expected that the borrower’s obligation to repay any loan made under an MPN would, if challenged, be ultimately established by whether the loan was disbursed and whether the student for whom the loan was made received the benefits of the loan. The MPN states that by accepting any disbursements issued at any time under the Note, the borrower accepts the obligation to repay the loans. 34 C.F.R. 668.165(a) and 34 C.F.R. 682.207(b)(1)(ii) currently set forth the requirements for documenting disbursement and delivery. Nothing in the MPN process alters the existing obligation to repay insurance or reinsurance benefits if the Secretary cannot enforce a loan against a borrower due to the lack of evidence that the borrower accepted the loan funds. |