Magazine article University Business

Sign Here: Looking for the Most Direct Route to the Paperless Office? Start with E-Signatures. (Special Section: Financial Aid)

Magazine article University Business

Sign Here: Looking for the Most Direct Route to the Paperless Office? Start with E-Signatures. (Special Section: Financial Aid)

Article excerpt

Until just a few years ago, the University of Minnesota Office of Student Finance (OSF) was all about paper. Fourteen employees staffed the records maintenance department, and students waited in long lines to sign promissory notes. The department estimates that more than 500,000 pieces of paper were wasted each and every year. That works out to a stack almost 17 feet tall.

Now, the mailroom has disappeared; a training room is in its place. One employee handles records maintenance. There are no lines to sign promissory notes. And the hundreds of thousands of sheets of paper that used to define the office are gone, as students fill out applications and sign their promissory notes online. Minnesota, in fact, was one of the first universities to develop a paperless financial aid system. But it was no easy task: The changeover took an immense amount of technology and planning. There were systems to design, processes to work out, staff to train, and equipment to purchase. Yet, the real key to getting rid of the paper, says former OSF interim director Nancy Sinsabaugh, revolved around a single step: the use of e-signatures.


An e-signature is defined as "an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record," The definition comes from the "Electronic Signatures in Global and National Commerce Act," which was signed by former President Bill Clinton in 2000. The act, which gives e-signatures equal legal footing with "wet" signatures, is one of two key documents for higher ed users of e-signatures.

According to David Temoshok, director for Identity Management and Policy at the General Services Administration's Office of Governmentwide Policy, the E-Sign Act laid the groundwork for schools. "It says, basically, that you cannot deny the legality of an electronic signature just because it is an electronic signature," he explains. "And any law that would restrict this is preempted." The act, however, specifically exempted student loans for a year, or until the Department of Education issued its own regulations, whichever came first. DOE's Standards for Electronic Signatures in Electronic Student Loan Transactions, issued in April 2001, provided standards for electronic transactions conducted by lenders, guaranty agencies, schools, and borrowers under programs authorized by Title IV of the Higher Education Act of 1965.

More important, the Department of Education itself started using e-signatures in July 2001. Its rollout of an e-signature for the Free Application for Federal Student Aid (FAFSA) provided a good example of how it could be done, and how it might be done elsewhere. The Department encouraged students to file the FAFSA online, and offered a personal identification number (PIN) that could be used to sign the document electronically. The program has since grown rapidly. As of this past August, nearly half of the FAFSAs filed for the year were filed electronically. The government is now expanding the use of the DOE PIN. In addition to electronically signing the FAFSA, students will use the DOE PIN to sign federal loan promissory notes and forms that help students consolidate loans after graduation.

"And when the loans start servicing, they can use the PIN to establish electronic debit of their bank account, and we'll give them a quarter-point off the interest rate," says Charlie Coleman, deputy chief information officer for E-Commerce and Innovation in the Department of Education's Federal Student Aid program office.


There are many ways to construct an e-signature. The Department of Education's standards document mentions, among others:

* "shared secrets," e.g., a PIN or password

* credentials provided by a trusted third party, such as a public-private key pair (described on the following page), a cryptographic smart card, or a one-time password device

* electronic files based on biometric data such as fingerprints or retinal patterns

* scanned written signatures

The trick, say the experts, is to ensure that the signature is correctly linked to both the signer and the document. …

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