What is a Master Promissory Note (MPN)?

Get detailed information on Master Promissory Note, its references, definition, and how to complete it. The article has it all explained below.

Updated by Sharan Kumar on 23rd September 2020

If you are getting a federal student loan, you will be required to sign a Master Promissory Note(MPN). This is a legal document that holds you accountable to pay the loan you just took from your lender the U.S. Department of Education, back in the time mentioned in your lender's terms of the agreement in full with the total amount borrowed with the fees and the interest you owe for the time duration.

It will also include information about the loan such as how the interest that you are required to pay is calculated when it will be charged, the repayment plans that you can avail, the deferment and the cancellation provisions, and how to go about them.

Most often a single Master Promissory Note will allow you to take out multiple student loans for up to periods of 10 years, as long as your school is ok with it. Your Master Promissory Note will mention all the terms and conditions that your student loan has and so you must give it a reading before you go ahead and sign it.

If under certain circumstances if your school does not approve of you taking more than one loan under the MPN or in case you get an endorser while borrowing a Direct PLUS Loan, you should be eligible to take out more than one Direct Loan on a single MPN for up to the time duration of 10 years.

Do keep this in mind that when you sign an MPN you are making a promise to repay all the loans that you are borrowing under the note in full with all the fees, interest, and more. Regardless of whether you -

  • Have completed your education

  • Can get a job after you finish school

  • You did not appreciate the education you got

At the time or before the first disbursement of your loan directed either at your or on your behalf, you shall receive a disclosure statement that mentions all the information about any loan that the school plans on disbursing under your Master Promissory Note.

It will include and is not limited to the loan amount, fees, and the expected time at which the disbursements will be happening and how much of the amounts will be received. 

Table of contents

When do I sign my Master Promissory Note (MPN)?

You are required to sign your Master Promissory Note before receiving your loan funds.

In the instance that you are taking a Direct Loan, you will be required to sign an MPN under the following circumstances -

  • Never have you before signed an MPN for the type of loan you have currently applied for

  • If your school requires you to sign a new note every year (most don't)

  • You have signed a note but no loan was disbursed and one year has passed since the signing

  • You last signed an MPN over 10 years ago

For Direct PLUS loans, if it shows that you have an adverse credit history and you get an endorser, you will be able to receive only a single loan under the MPN that you sign, if you later want to receive another Loan, you will need to sign a new one.

If you sign a note and receive a Direct PLUS loan without any endorser, but later shows up as to having a bad credit history and obtain an endorser for a future PLUS loan, you will have to sign a new MPN for that loan. 

How do I sign it?

Your Financial Aid Office at your school or college will be able to guide you through the entire process of signing your Master Promissory Note. The process will mostly involve you signing into your account at StudentLoans.gov through your FSA ID and signing the online MPN. But if you choose to do so, you have the option to sign a paper MPN too.

For the completion of the online Master Promissory Note, you will need your FSA id username and password. In the instance that you are the parent of a child and are applying for a Direct PLUS loan in favor of your child. You must use your FSA ID and not your child's ID.

You will be required to complete the entire process of filling and signing your Master Promissory Note in a single sitting, so make sure you have the time to complete the same. The average time taken to fill and sign an MPN is around 30 mins from start to finish. You will be required to fill the form on studentloans.gov. 

This process involves the following steps - 

  • The students are required to use their FSA ID and log in to the website while completing their subsidized/unsubsidized MPN or the Graduate PLUS Master Promissory Note

  • Once you have logged in, select the complete loan agreement (MPN)

  • There is a learn more button under the type of loan you are completing and it tells you about the things you need to complete for the MPN

  • Provide all the information required to complete the MPN

  • Adverse credit history and using an endorser will be explained on the page. There will be a credit check for the same once you apply

  • After completing the application, return to the Loan application page to see any further steps that may be necessary for you to complete in the federal loan that you are applying for

What kinds of MPN are there?

MPNs differ from the loans that you are applying and also for those who are applying for them as follows

  • There is the subsidized and unsubsidized Loan Master Promissory Note for undergrad students

  • There are the Graduate and Professional Loan MPN for Grads and Professional students

  • There is the Direct PLUS Parents Loan MPN for parents of dependent undergrad students

What details does the Master Promissory Note contain?

After signing a Master Promissory Note, within 10 years you can take multiple federal loans, and the same MPN works for all. So what does this legal Master Promissory Note consists of? MPN consists of the following details :

  • The total loan amount you owe the ED

  • Repayment options

  • Cancellation supply

  • Deferment, forbearance, or forgiveness can be granted

  • Details if your loan is subsidized/unsubsidized

  • Interest rates

  • What interest rates you must pay the current year

  • If any loan fee is applicable

  • When your repayment starts

When you borrow federal loans you must sign these Master Promissory Note. But in certain circumstances mentioned below, you will need to sign the MPN again.

  • After you signed the MPN, but the loan was not disbursed

  • If it is a mandate to sign MPN in your school every year

  • When a new type of loan is being disbursed

Parents with PLUS loans also have to sign the MPN, and there are different MPN that must be signed for Direct Subsidized and Unsubsidized loan programs.

                                                    Worried about your college tuition? Find the student loan for you

How to read your MPN?

MPN is made up of various sections that are meant for different purposes so here we'll go through with explaining each of them and what are they concerned with. 

For example, the MPN consists of majorly 5 sections from A to E.

  • Section A - is full of your information and two of the references whom you have known for greater than three years.

  • Section B - concerns your school information and is completed by them.

  • Section C - is your authorization information.

  • Section D - consists of your signature and your promise to pay back.

  • Section E - consists of all the terms and conditions of the MPN.

Those who are borrowing for the first time will be scheduled for an entrance counseling interview which will explain to them and introduce them to the obligations of the funds they are borrowing and them have you sign the MPN.

Your school's Financial Aid Office will help you to under the promissory note and its language in total. 

Advice concerning your MPN

Previously, it was required by you to sign a new Promissory Note for each new federal student loan you received. But note that 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 can take out multiple similar loans on the same MPN in your favor for up to 10 years, so make sure to read the terms and conditions on your MPN and understand their meaning before you go ahead and sign it.

Also, keep in mind and make a note that it is your responsibility to pay back your loan as you have agreed to it and as it has been mentioned in the MPN even if you do not finish school.

Make sure you understand fully the repayment information and the deferment and cancellation policies before you go ahead to sign the Master Promissory Note.

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Frequently Asked Questions

  • 1.How long does it take for a Master Promissory Note filing process?

    The entire MPN process must be completed in a single session, so be sure you have enough time before you start. Each MPN takes approximately 30 minutes to complete.

  • 2.What information is included in an award letter?

    Financial aid award letters usually contain this information - Cost of attendance (COA), an estimate of what you can expect to pay for one year of school. This includes tuition and fees, room and board, books and supplies, transportation, and even personal expenses.

  • 3.How long does it take to get financial aid after submitting verification forms?

    Verification processing time is generally three to four weeks during peak season (June-October), and two to three weeks during non-peak season (November-May). Therefore, students should start the process as soon as possible.

  • 4.What happens if a promissory note is lost?

    The judgment takes the place of the note, and to prevent the possibility of another party attempting to enforce the note in the future, the court takes possession of the original note and cancels the note. As with anything, on occasion, promissory notesare lost, stolen or destroyed.

  • 5.Do you have to finish an ace promissory note?     

    If you are taking out a Direct Loan, you should sign a Master Promissory Note (MPN) under any of the accompanying conditions: You have never recently marked an MPN for the sort of advance you are taking out. Your school expects you to sign another MPN every scholarly year (most schools don't need this).

  • 6.Do Master Promissory notes terminate?       

    An MPN is an authoritative archive that contains the borrower's rights and responsibilities and terms and conditions for reimbursement. Direct PLUS and Direct Subsidized/Unsubsidized advances have distinctive MPNs. An MPN can likewise be useful for as long as 10 years if certain enlistment necessities are met.

  • 7.Who holds the promissory note while it's being reimbursed?       

    The moneylender holds the promissory note while the credit is being reimbursed, at that point the note is set apart as paid and gotten back to the borrower when the advance is fulfilled. Promissory notes aren't equivalent to contracts, yet the two regularly go inseparably when somebody is purchasing a home.

  • 8.Is the promissory note made sure about?       

    A made sure about the promissory note is a commitment to pay that is made sure about by some sort of property. The property that makes sure about a note is called security, which can be either land or individual property. A promissory note made sure about by guarantee will require a subsequent record.

  • 9.What is the contrast between a promissory note and an advance arrangement?     

    What is the contrast between a Promissory Note and a Loan Agreement? The two agreements prove an obligation owed from the Borrower to the Lender, yet the Loan Agreement contains more broad conditions than the Promissory Note. Further, just the Borrower signs the promissory note while the two players consent to an advance arrangement.

  • 10.  When might you utilize a promissory note?     

    A promissory note is utilized for contracts, understudy loans, vehicle advances, business credits, and individual advances among loved ones. If you are loaning a lot of cash to somebody (or to a business), at that point you might need to make a promissory note from a promissory note layout.

  • 11.How would you void a promissory note?     

    A promissory note is an agreement, an authoritative understanding that somebody will pay your business an entirety of cash. Anyway under certain conditions – if the note has been changed, it wasn't accurately composed, or on the off chance that you don't reserve the privilege to guarantee the obligation –, the agreement gets invalid and void.

  • 12.What is the distinction between a made sure about an unstable promissory note?   

    It's quite straightforward. A made sure about the note is any obligation collateralized with a genuine property like a first deed of trust or vehicle title. Then again, an unstable note is any obligation not made sure about my insurance (or unsecured).