What is a Master Promissory Note?

loan-obligationsAll loans require you to sign a promissory note. When you take out a federal student loan, you are required to sign a Master Promissory Note (MPN) before you receive your funds. The MPN is a legal record you sign promising to repay your student loans and all accumulated fees and interest.

The MPN will contain everything you need to know about your loan, including:

Your MPN is a legally binding contract between you the borrower and the lender, which in the case of a Direct Loan is the U.S. Department of Education.

Importance of the Master Promissory Note

The MPN is the most important loan document you will fill out as it enters you into an agreement with the federal government to pay back any funds issued. All of your rights and responsibilities as the borrower are listed on your promissory note and should be read very carefully and thoroughly before signing.

You should keep a copy of your MPN in a safe place for the duration of your loan and loan repayment. The MPN can help you keep track of your student loan data, as it will include the issuance date, amount, and all other important information you need to know about your loan and repaying it.

Signing the MPN

You are required to sign a Master Promissory Note when taking out a federal student loan, and you are required to provide certain information including your personal, school, and reference information. The financial aid office at your school can help you through the process, or you can complete it online at the government’s student loan website. In order to complete and electronically sign the MPN online, you must have a FSA ID. You have to fill out and sign your MPN in one sitting, which takes about 30 minutes from start to finish.

How to Read Your Master Promissory Note

Your MPN contains different sections, some of which include your information as a borrower, and other sections that include all the terms and conditions concerning your loan. For example, Section A contains your personal information as well as two references you have known for at least three years. Section B is your school information and should be completed by them. Section C contains your authorization information, and section D is your signature and promise to pay. Section E lists all the terms and conditions.

First-time borrowers will be scheduled for an entrance counseling interview, which will outline the obligations of borrowing funds and allow you to sign your MPN. Your financial aid office can help you to fully understand the language on your promissory note as well.

Advice Concerning Your Master Promissory Note

In the past, you were required to sign a promissory note for each federal student loan you received. Now the Master Promissory Note may be the only one you have to sign even if you take out more than one Direct Loan. Your school may take out multiple loans of the same type on the same MPN on your behalf for up to 10 years, so it is important to read and understand all the terms and conditions on your MPN before signing it.

It is also important to note that you are responsible for paying back your loan as agreed to in the terms of your promissory note even if you do not finish school. Be sure to understand the repayment information and deferment and cancellation policies before signing.