The U.S. Department of Education has passed a major milestone in efforts to modernize its massive student loan systems. The department's Office of Student Financial Assistance (SFA) has put in place the first electronic signature option for conducting business with the federal government. The feature allows borrowers in the Federal Family Education Loan (FFEL) and William D. Ford Federal Direct Loan programs to "sign" for their loan online using their unique department-issued Personal Identification Number (PIN), rather than having to print a signature page, sign by hand, and send through the mail.

"With this option in place, students across the country can now obtain financial assistance paper-free," said U.S. Secretary of Education Rod Paige. "Our goal is to make financial aid available to students, and advances like this one make the aid process faster and more convenient for students without compromising the quality or reliability of the application process."

Enabling borrowers to sign master promissory notes electronically for their student loans was the last obstacle to building a completely paperless student loan process. Electronic filings are faster than paper and reduce errors.

The Electronic Signatures in Global and National Commerce Act, signed into law last year, made it possible to recognize a PIN as a legally binding signature. With this cutting edge technology, the department may now accept electronic signatures on the 13 million student loan applications that are funded each year for a total of approximately $31 billion.

The e-sign option is available to lenders in the Federal Family Education Loan (FFEL) program, as well as to applicants borrowing through the Federal Direct Loan program. Major FFEL lenders who are using the department-established standards and the Student Authentication Network, which recognizes the department-issued PIN, include: College Foundation, Inc.; Educaid; Pennsylvania Higher Education Assistance Authority; Rhode Island Student Loan Authority, and Wells Fargo.

The department's e-sign option uses established Web-based technology. The borrower goes to a lender's Web page using Secure Sockets Layer encryption (a protocol recognized by both Netscape Navigator and Microsoft Explorer) to protect the privacy of the personal information. The lender redirects the borrower to a separate site where four authentication factors-name, birth date, Social Security number, and the department-issued PIN-are validated. The validation site redirects the borrower's browser back to the lender's site, transmitting the personal data (but not the secret PIN). The lender's site then walks the borrower through the required steps of furnishing required information, disclosure of terms and conditions, and agreement, recording each stage of the process in an electronic loan file. At the conclusion, the lender's site gives the borrower an Adobe® Portable Document Format (PDF) file of the completed promissory note.

Electronic options now available to students, prospective students, and their families on U.S. Department of Education Web sites include:

• Information about attending college and the variety of student aid (loans and grants) available can be found at a variety of government and private Web sites, including http://www.students.gov/STUGOVWebApp/Public.
• To get a PIN, a student, prospective student, or the parents of a student or prospective student, can visit http://www.pin.ed.gov.
• To file a Free Application for Federal Student Aid (FAFSA) people can go to http://fafsa.ed.gov and complete the form online.
• Borrowers can complete their Entrance Counseling, which promotes responsible borrowing, as well as Exit Counseling, which prepares them for repayment, online, by visiting http://dlservicer.ed.gov under Account Management.
• Borrowers can have their loan repayments deducted electronically by setting up an Electronic Debit Account (EDA). Borrowers can obtain an EDA application online at http://dlservicer.ed.gov under Download Forms.
• Borrowers can consolidate their loans at http://www.loanconsolidation.ed.gov.
• Aid recipients (both loans and grants) can view their account status at http://nslds.ed.gov or, in the Direct Loan program, at http://dlservicer.ed.gov.

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