What is an Master Promissory Note (MPN)?

Get detailed info on What is a Master Promissory Note, its references, definition, and how to complete it. We have it all explained here in this article below.

Updated by Sharan Kumar on 10th June 2019

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. 


List 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 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.


FAQ's

  Can a promissory note be cancelled?


Yes, once the loan is repaid in full, the next thing to do for the lender would be to mark the promissory note and state that the loan has been paid in full. But before this can be done the lender must be in agreement with the terms of canceling the same.

  Should a promissory note be notarized?


Usually, promissory notes need not be notarized. Generally, legally enforced promissory notes are required to be signed by individuals and contain specific promises to repay set amounts of money. Usually, they also mention such due dates for payment and a predetermined and agreed upon interest rate.

  Are MPN references contacted?


To finish an MPN, one must be able to produce two credible and strong references that have known you at least a period of three years. These references can be contacted by your loan servicer for multiple reasons, but will most commonly be contacted when you enter delinquency and/or default.

  Can a promissory note be handwritten?


Most often promissory notes are written on a computer and printed out or a pre-made form is present which is filled out, a handwritten promissory note needs to be signed by both the parties and will only then be legal and be able to stand up in court.

  How long does it take for MPN to process?


Most often the time taken for an MPN to process is anywhere between 3-5 days, depending on where you file and if you file it online or not. Your application would take about 3-5 days to process. In the instance that it is processed and approved, you will receive a Student Aid Report (SAR).

  Do I have to complete loan entrance counseling every year?


Not really. Before borrowing any federal student loans all students are required to complete entrance counselling and an MPN. Once this is on file, entrance counseling has no expiration date and your MPN is valid for about 10 years from then as long as you continue to borrow loans.

  What is a Master Promissory Note (MPN) reference?


The first reference on a student's MPN is usually required to be a student's parent or guardian. The two references listed on the MPN can't have the same mailing address. Before a student is able to receive funds from a federal student loan, he or she must have signed the MPN.

  What does signing an MPN mean?


The MPN is a legal document that is used to make one or more Direct Loans for one or more academic years (up to 10 years). By signing the Master Promissory Note the borrower is essentially signing a contract stating that he/she agrees to repay all the loans that he/she has made under the Master Promissory Note.

  Do you have to fill out a Master Promissory Note every year?


Generally, you are not required to complete a new Master Promissory Note each year. These forms are typically good enough for 10 years. Although you may be required to fill out a new one if you change your lender or if you change schools.

  How do you complete the Master Promissory Note?


  • Submitting your personal and school details.

  • Submitting information regarding your references.

  • Going through the terms and conditions of the MPN.

  • Reviewing the info you have provided, electronically sign it and then submitting the MPN.