What is the Master Promissory Note (MPN)?

A Master Promissory Note (MPN) is a legal contract that explains the terms and conditions of your loan or loans. You must sign it, promising you will repay your loan or loans, plus interest and fees, to the lender.

The MPN is a legally binding document. If you break your signed promise and don’t repay your student loans, the lender may sue you or even garnish your wages.

Reminder: Student loan debt is difficult to discharge during bankruptcy, so do your best to borrow what you’ll be able to reasonably repay.

Keep reading to learn what you’re agreeing to in a Master Promissory Note, the differences between a promissory note and an MPN, and how to fill out an MPN.

A Master Promissory Note (MPN) is a legal document that details what student loans you’re receiving and the terms.

Your MPN details how much you’re borrowing, any interest, potential fees, repayment requirements, and how to cancel or adjust those loans. You will likely fill out your contact info, including your driver’s license number and permanent mailing address.

You must sign your name, promising to repay the loan amount, accrued interest, and fees. You may also have to promise to spend the loan money on certain education expenses and not on food or other unrelated expenses.

If you ever have any questions in the future about loan repayment or other terms of your student loans, it’s best to look back at your MPN.

There are multiple types of MPNs you may need to sign:

• For Direct Subsidized Loans and Direct Unsubsidized Loans

• For Federal PLUS Loans (for professional degree or graduate students)

• For Federal PLUS Loans (for parents, one MPN per child for whom you’re borrowing)

• For private student loans (varies by private lender)

• Maximum amount of student loans. Your MPN shows the maximum borrowing limit you’re qualified for.

• How the money can be spent. Your MPN should explain how the borrowed money can be spent. Some loans may only be spent on your tuition. Other loans could allow payment for room/board and other expenses.

• Repayment obligations. You must repay your student loans whether you finish school or not. If you don’t pay back your loan, you will likely be responsible for your lender’s collection costs, attorney fees, court costs, and other related expenses.

• Interest rates. Your MPN should include your loan’s interest rates and how interest will be calculated. The higher the interest rate, the more you’ll pay over the life of the loan.

• How to repay loans while still enrolled. You can begin making interest payments while in school to avoid larger interest charges and a bigger loan bill after you finish school.

• How to adjust or not accept the loan. Within a specific time, you may cancel any loan on your MPN or request a lower amount. Feel free to refuse, adjust, or accept the amounts offered. If you’re confused about adjusting the loans on your MPN, contact your school right away.

• Cosigner release. Federal student loans never require a cosigner, but private loans might if you have low or no credit. Your MPN should detail whether a cosigner can be released after a certain amount of on-time monthly payments.

• Borrower benefits. Your MPN should include your rights and benefits, such as grace periods, privacy rights, income-driven repayment plans, deferment/forbearance options, loan forgiveness options, etc.

Typically, you have to fill out a Master Promissory Note after being accepted to a college, after filling out the FAFSA, and before you begin attending.

Do I have to fill out a Master Promissory Note every year? In many cases, you only have to fill out one Master Promissory Note for every 10 years of education. However, there are many unique situations when you may have to fill out a new MPN:

• You never signed a Master Promissory Note.

• You signed your Master Promissory Note more than 10 years ago.

• You’re enrolling in a foreign college or university.

• Your school requires you to sign a new Master Promissory Note each academic year.

• Your private student loan lender requires you to sign a new Master Promissory Note.

• You signed a Master Promissory Note more than a year ago but never received a loan.

• You borrowed a Parent PLUS loan with an endorser, someone who promises to pay the student loan if the parent borrower fails to pay.

• You are a federal PLUS Loan borrower taking out PLUS Loans for multiple children. (You have to sign a separate Master Promissory Note for each child.)

A regular promissory note is a legally binding contract in which you agree on loan terms with your lender. In most forms of money lending, each new loan requires a new promissory note.

A Master Promissory Note is also a legally binding contract but holds more weight than a standard promissory note. Signing one MPN lets you borrow multiple student loans over many years (up to 10 years for Federal Direct Loans).

Most people electronically sign an online Master Promissory Note. After you fill out your FAFSA, your school of choice will send you a financial aid award letter. After you accept it, your school should send you an MPN to complete.

You have to complete the MPN in one session. It takes approximately 30 minutes to read and complete.

You may sign a paper version of the MPN (through your school’s financial aid office) or sign a digital MPN on the U.S. government’s secure website. Log into studentaid.gov with your Federal Student Aid ID (FSA ID) and go to the MPN page for undergrad students, graduate and professional students, or parents.

Before signing the Master Promissory Note, double-check that you understand all of the conditions and terms associated with your student loans. After reading and understanding the MPN, finish filling out the Note by signing your electronic signature.

Providing references

On your Master Promissory Note, you need to provide the contact information for two references who have known you for at least 3 years. These references cannot live at the same address as each other.

The references you provide are not cosigning your loans or providing a character reference. This means they are not legally obligated to repay your debt if you default on your student loan payments. You’re only providing their names and contact information so that the student loan lender(s) can locate you if your contact information changes.

If you move without telling your lender, the loan lender or collections agency will contact your references to try and “skip-trace” you. The lender wants to ensure you’re getting their student loan bills.

No, your parents do not have to sign your Master Promissory Note.

If a parent is taking out Parent PLUS Loans, they must sign their own MPN.

Reminder: Two parents can’t jointly borrow a PLUS Loan. Only one parent can be legally responsible for repaying the PLUS Loan.

Once you submit the Master Promissory Note to the U.S. Department of Education, the federal government must inform your chosen college’s office of financial aid. Your school will disburse your loan funds soon after that — usually 2-10 weeks later.

If there are any leftover funds after tuition and fees are covered, your school will disburse the leftover loan money to you within 2 weeks.

Before the student loan disbursement, you’ll go through entrance counseling. Student loan entrance counseling is designed to reduce delinquency and default by informing new borrowers about:

• The responsibility you take on by accepting federal student loan money

• How student loan repayment works, including repayment terms

• The consequences of student loan delinquency and default

• Resources you’ll have access to as a federal student loan borrower, such as forgiveness programs, income-based repayment options, and forbearance/deferment

• How interest accrues and is capitalized

This informative session is mandatory for all first-time federal student loan borrowers and grad students or professional students seeking Federal Direct PLUS Loans for the first time.

Parents with PLUS Loans are not required to take entrance counseling.

Entrance counseling takes about 30 minutes to complete and must be done in one session.

If you’re a first-year undergraduate student and a first-time borrower, your school may require you to wait 30 days after the semester begins before your loan money is disbursed. Ask your school representative whether this is the case where you’re attending.

The Master Promissory Note is just one step among many on your way to affording college. The smarter you are about student loans, repayment options, the new PSLF Waiver, and loan forgiveness, the better off you’ll be.

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