HEAT oven to 350°F.
LAYER half each of the macaroni, Velveeta and Cheddar in 13x9-inch baking dish sprayed with cooking spray. Beat egg and milk with whisk until well blended; pour half over ingredients in baking dish. Repeat with remaining macaroni, Velveeta, Cheddar and milk mixture.
SPRINKLE with paprika.
BAKE 15 min.; stir carefully until well blended. Bake an additional 15 min. or until macaroni mixture is heated through and top is golden brown.