Changes in the Student Loan Industry

Please read, you may need to act or it could cost you money

Over the past several months, there have been many changes in the student loan industry. The College Cost Reduction and Access Act of 2007 cut lender subsidies. This, in combination with the subprime mortgage crisis (which has increased the lenders' cost of capital) has made it less profitable for lenders making federal and private education loans. This has caused several student loan lenders to stop participating in the Federal Family Educational Loan (FFEL) Program. However, there are still many lenders that will continue to provide student loans. Our office is here to assist you with any questions that you may have regarding this situation.

On June 5, 2008, the Financial Aid Office sent out emails to students who borrowed loans from a lender that is no longer participating in the FFEL programs. If you are one of these students, and you wish to continue to receive Stafford, Parent PLUS or Grad PLUS funds, you will need to complete a new Master Promissory Note (MPN.) During this process, you will select a new lender from which to borrow any of these loans. In order to assist you in completing your MPN, please use the following information:

1. UWM has a suggested lender list. This list has been prepared using a set of standards that we have developed to best meet the needs of our students. Lender Standards
2. Students may choose any lender that participates in the FFELP program regardless if they are on the Suggested Lender List.
3. To complete a new MPN for a Stafford loan, proceed here.
4. To complete a new MPN for a Grad Plus loan, proceed here.
5. To complete a new MPN for a Parent Plus loan, proceed here. Information on Parent Plus loans can be found on this page.

Questions Students May Have:

1. Which lenders are no longer participating? - Lenders UWM students have borrowed from that are no longer participating in these federal loan programs include: Student Loan Xpress, TCF Bank, American Education Services, National Education, College Loan Corporation, AFG-Provincial Bank, NextStudent, Goal Financial, Collegiate Solutions, Graduate Leverage and College Board.
2. I have already accepted my loans on PAWS, do I need to do anything? - The two processes are independent of each other. You have been offered a loan and accepted it, but you still need to complete a new Master Promissory Note because the lender you have previously used is no longer participating in the program.
3. Great Lakes is my lender, why did I receive an email? - Great Lakes is not a student loan lender. Great Lakes is a Guaranty Agency as well as a servicer of student loans for many lenders. While many processes run through Great Lakes, they are not the lender of the loan and do not actually provide the loan funds.
4. Is there any rush to do this? - A new MPN needs to be completed in order to receive loan funds. There are several key factors to consider here. For the past number of years, Great Lakes has paid the 1% federal default fee for our students. Given the changes, starting July 1, 2008, they will no longer be able to do this. For any loans certified by UWM prior to this time, Great Lakes will continue to pay this 1%. For loans certified after July 1, 2008, the 1% default fee will be subtracted from the proceeds of the loan (paid for by you the student.)
5. The process is telling me that I need to complete Entrance Counseling, which I have already done in the past - The process will look to see if you have completed entrance loan counseling online through the FastFacts product. When UWM moved to using the banks/guaranty agencies three years ago, we were able to "grandfather" in those students that had borrowed through the Direct Loan program already--at that time completing entrance counseling for a second time was not required. We are unable to do that this time. If you completed entrance counseling under the Federal Direct program and not the FFEL, you will be required to complete this version of entrance counseling at this time.
6. Should I complete a new MPN even though I haven't received a Financial Aid Award yet? - You will need to complete a new MPN to receive any additional loan funds. You can complete this without having received a Financial Aid Award. Additionally, you can check your PAWS account to determine what additional documents you are missing at this time. If you have not yet filed the FAFSA, you can complete it at www.fafsa.ed.gov. We will not be able to certify your loan, however, until after it has been offered and subsequently accepted by you.
7. How do I know what lender to choose? - You can choose any lender that participates in the FFELP program. Interest rates are determined by federal regulation and are not different between lenders. However, lenders may have differences in front-end or back end benefits, including reductions to interest rate based on qualifying criteria. When completing the MPN online, you can do a comparison to show differences between lenders. Please review the Standards used by UWM when determining a "Suggested Lender List" and then compare these lenders to any other lender you may wish to consider.
8. Does this mean my student loan is being cancelled? - We are not cancelling your loans. If you have accepted your award in PAWS, your loan will stay in an accepted status, but it will never be disbursed if you do not complete a new MPN. Once you complete a new MPN, all processing will continue as normal and you should not be required to do anything else.
9. Once I do a new MPN, do I need to do anything else? - If you have been awarded financial aid, you have accepted your loans in PAWS and completed a new MPN, you should have done everything you need to do. (Please review the Financial Aid Handbook found on this website for details regarding credit levels, disbursing aid, or other issues that may affect you.) If you have not yet been awarded, please check your To Do list on PAWS to see what you are missing or complete the FAFSA if you need to.

If you have any questions, regarding this process, you can contact our office at finaid@uwm.edu.