If you are getting a federal student loan, you will be required to sign a Master Promissory Note(MPN). This legal document is what 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
Are able to 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 info 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.
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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 there was no loan that 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 u 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 own 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 info 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.
How to read your MPN?
MPN is made up of various sections which 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 personal info and two of the references whom you have known for greater than three years.
Section B - concerns your school info and is completed by them.
Section C - is your authorization info.
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 completely finish school.
Make sure you understand fully the repayment info and the deferment and cancellation policies before you go ahead to sign the Master Promissory Note.