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ATTACHMENT C: EXAMPLES OF NOTIFICATION AND CONFIRMATION Definitions: To ensure student control over the borrowing process, each borrower who will be receiving a loan under the multi-year feature of the MPN will be notified of the proposed amount and type(s) of the loan(s). A process of confirming the amount and type(s) of the loan(s) is also an option. The notification and confirmation processes can be part of and/or can supplement the existing required notices and disclosures. The terms Notification and Confirmation are described below. * Notification: A process whereby the school, lender, or guarantor notifies the borrower of the proposed loan package and the borrower is only required to take action if he/she wants to reject or make adjustments to the types and/or amounts of the loans. * Confirmation: A process whereby action is taken by the borrower to confirm the proposed type(s) and proposed amount of the loan(s) or to request a specific loan amount. A school or lender may elect to establish confirmation for the entire loan or may elect to request the student to confirm each disbursement of the loan. Requirement: Confirmation and notification are school and lender determined processes that are designed to increase the borrower’s understanding of his/her loan obligations. The school and lender must have in place a process or processes for providing confirmation or notification, and must document their standard confirmation/notification process (es). Liability: In evaluating a claim for insurance or reinsurance, the issue of confirmation or notification will not be reviewed and a claim will not be denied based on the absence of any evidence relating to confirmation or notification in a particular loan file. However, if a court rules that a loan is unenforceable solely because of the lack of evidence of confirmation or notification process (es), insurance and reinsurance benefits must be repaid. Timing: There are numerous points in the loan process for providing the student the information required for notification and the opportunity to confirm, to reduce or to cancel the loan. The approach used by schools and lenders will depend on a number of factors including the following: · The school’s financial aid application process - does it provide for a student to request loans? The schools packaging philosophy -- whether loans are included in an award letter. Whether or not the school experiences a high number of adjustments to the aid offered in the award letter -- the school may prefer to secure confirmation or provide notification prior to certification of the loan thus minimizing adjustments later in the loan process. The timing of the loan certification process -- does the institution prefer to certify loans concurrent with the awarding process or postpone certification to later in the loan cycle? Examples: The following are examples of confirmation and notification approaches that could be used. Lenders and schools are encouraged to use and test various technologies such as the Internet, e-mail, card technologies, or voice response to facilitate the process. Financial Aid Application Stage If the school has its own campus financial aid application or supplements, it could include a loan request section using the format included in item 11 of the MPN. In this situation, the student would use the application to request a loan(s) for a specific amount or for the maximum loan(s) he or she is eligible to receive for the applicable loan period. Packaging Stage The school’s award letter may include proposed loan amounts and types. The student would be asked to either (1) confirm the aid offered by responding to the offer made by the school; or (2) only take action if he or she wants to cancel or reduce the loan amount offered. Alternatively, the award letter may list the amount of loan eligibility and the student would be advised to contact the school or lender to request a specific loan amount. Pre-Disbursement Stage The lender could send a loan approval form to the student, who would be asked to confirm the offer or to take action only if he or she wants to reduce or cancel the loan. The borrower could also be told to contact the lender and request a specific loan amount or maximum eligibility consistent with the format included in Item # 11 of the MPN. Disbursement and Delivery Stages There are additional notification points at the time of disbursement and delivery of loan proceeds. Although the disclosure by the lender or guarantor at the time of disbursement constitutes a notification action, it cannot be the only process supporting the loan; the school or lender must supplement the disclosure with another notification or confirmation process (es). Possible notification opportunities at the disbursement and delivery stages are: The lender issues a disclosure statement and provides instructions to the student as to how to cancel or reduce the loan amount. The student may decline the loan by refusing to endorse the check. If a loan is disbursed by EFT, the school notifies the student that the funds have been applied to the student’s account at the school and the student may cancel or adjust the disbursement amount pursuant to regulations at 34 CFR 668.165. |