What Is a Master Promissory Note (MPN)?

Kelly Hernandez
A pencil sits on top of a document labeled "Promissory Note."
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If you recently took out a student loan or you’re shopping around for the best offer, there are many student loan terms you’ll need to understand. One of the most important student loan terms you should learn more about is the Master Promissory Note (MPN). If you agree to a student loan through the federal government, you’ll be asked to sign an MPN.

An MPN is the contract between you and the lender and outlines the terms and conditions you’re responsible for adhering to with the student loan. On the MPN, you’ll see important characteristics of your loan outlined, including the interest rate and loan amount you agreed upon. Whether you’ve already agreed to a student loan or you’re still weighing your financial aid options, it’s important to understand what an MPN is, the information it provides, and when you’ll need to sign it.

Types of Master Promissory Notes

While the two terms are similar, a promissory note is different from a Master Promissory Note. As a borrower, your MPN is the agreement made between you and the U.S. Department of Education when you take on a federal student loan.

A promissory note is sometimes required when you borrow money for a mortgage or other type of private loan. While a promissory note is also a legally binding contract that outlines the terms and conditions of the loan, it doesn’t apply to a federal student loan. However, if you take out a private student loan instead, the private lender may require you to complete and sign a promissory note to confirm you agree to loan terms. You may be asked to sign an updated promissory note every year while the loan is active.

If you take out a federal student loan, the type of MPN you’re required to sign depends on the type of loan you obtain. If you qualify for a subsidized or unsubsidized federal direct loan, you’ll be required to sign a federal direct loan MPN to obtain your loan and agree to its terms. If you qualify for a federal PLUS loan, you’ll need to sign a federal PLUS loan MPN to execute the loan contract. These two MPNs are different because they outline the specific loan terms that apply to each type of loan.

Why Are Master Promissory Notes Important?

MPNs are important documents because they ensure you and your lender understand and agree to loan terms. When you agree to a federal student loan, there will be extensive paperwork you’re responsible for completing. This may make it hard to understand the specific loan terms, such as:

  • Your loan amount.
  • The interest rate and fees and how these figures are calculated.
  • Your loan repayment terms.
  • Loan conditions.
  • Potential federal repayment programs that apply to your loan.
  • A loan payment grace period, if any is provided.
  • The contact information your lender has on file for you.

Since your MPN includes all of these loan details, you can refer to this single document if you have questions about your student loan.

When Do You Need to Sign an MPN?

Since federal student loans are strictly regulated by the government, you’re required to sign an MPN when agreeing to loan terms. In most cases, you’re only required to sign an MPN when the loan is enacted and never again throughout the life of the loan.

However, in some cases, you may be required to re-sign the MPN each year. The number of times you must sign and submit the MPN throughout the life of the loan depends on the specific terms of the loan and your school’s requirements.

If you take out a private student loan, you’re required to sign a promissory note. Most private lenders require you to re-sign this promissory note each year your loan is active. However, in some cases, private lenders will file the promissory note and won’t require another signature for the life of the loan. Your lender will provide you with information on the promissory note and when it needs to be signed when you agree to the loan contract.

How to Complete a Master Promissory Note

When you accept the responsibilities of your student loan and agree to the loan terms provided, you’ll be required to complete your MPN before proceeding. You may usually choose to complete the MPN online or in person.

If you choose to fill out the MPN online, it takes about 30 minutes to complete. You cannot save your work so you must have time to complete the MPN in one sitting. To complete the process online, you must:

  1. Visit the Federal Student Aid (FSA) website and create an online account if you don’t already have one.
  2. Make note of your FSA ID, which allows you to electronically sign the MPN.
  3. Locate two personal references who have known you for at least three years and can confirm your identity and personal information.
  4. Choose the MPN that’s associated with the federal student loan you’re applying for.
  5. Fill out the information on the MPN as it’s asked.
  6. Electronically sign the MPN and submit it to the loan servicer.

If you prefer to complete your MPN in person, you may be able to visit your school’s financial aid office to fill out a hard copy, sign, and submit it. Keep in mind, you’re required to provide contact information for two personal references who have known you for at least three years and can verify your personal information. It’s important to bring this information with you when you visit the office.

When filling out your MPN, review the loan terms and conditions and be sure you understand and agree to them before signing. Speak with a financial aid representative at your school if you have questions or an issue with the MPN.

Whether you submitted your MPN online or in person, once it’s completed you shouldn’t need to repeat this process throughout the life of the loan. However, if the lender requires another MPN, you’ll receive notification and information on how to complete the process again.

When you sign up for a federal or private student loan, there’s usually a lot of paperwork involved. An MPN is one of the most important documents you’ll fill out since it outlines the details of the loan, including your repayment terms. Understanding what’s included in your MPN and how to complete it is important when acquiring a federal student loan. Ensure you agree to the loan terms before signing and follow your lender’s instructions to complete the MPN correctly.

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