Rebecca Neubauer is a personal finance and science writer who specializes in writing about managing money, sustainability, entrepreneurship, and alternative living. She has a bachelor’s degree in environmental science, and she learned about personal finance on her journey to pay off $100,000 in student loans.
Expertise: Insurance planning, education planning, retirement planning, investment planning, military benefits, behavioral finance
Erin Kinkade, CFP®, ChFC®, works as a financial planner at AAFMAA Wealth Management & Trust. Erin prepares comprehensive financial plans for military veterans and their families.
If you’re preparing to take out a student loan, understanding the importance of the master promissory note is critical. A promissory note is an agreement between the lender and borrower that outlines your loan details, including the interest rate and repayment terms. This document is used for student loans, private loans, business loans, mortgages, and more.
The student loan master promissory note (MPN) is specific to federal student loans; you must complete and sign one when you take out Direct Subsidized, Direct Unsubsidized, and Direct PLUS loans.
Knowing what these documents contain is essential to obtaining federal student loans and understanding repayment options. Continue reading to find out what a master promissory note looks like, how to execute one, and what happens if you fail to execute an MPN.
In this guide:
Promissory notes are used for all types of loans, but master promissory notes are specific to federal student loans. Private student loans use standard promissory notes.
It is essential to understand what these documents contain because promissory notes are legal contracts that can be enforced in court. After executing an MPN, the borrower must repay the loan according to the terms in the note.
A promissory note includes the following:
A master promissory note also contains information about grace periods, deferment and forbearance options, and repayment plans.
A master promissory note can act as the loan agreement for multiple federal student loans throughout your education. Individual promissory notes for private student loans, and other types of loans, need to be issued for each loan a borrower takes out.
An MPN is a single loan agreement that groups federal student loans over up to 10 years of continuous education, including undergraduate and graduate education. A student (or parent in the case of Parent PLUS loans) completes the MPN after being deemed eligible for federal student loans through the Free Application for Federal Student Aid (FAFSA). You must execute your MPN before you can access loan funds.
The two types of master promissory notes are:
You must fill out and sign the appropriate MPN for each type of loan you’re taking out, so you may have to complete two MPNs if you borrow Subsidized or Unsubsidized loans and PLUS loans.
Both types of MPNs include the following sections. Direct PLUS loans require additional information, which we’ll discuss below.
An MPN for student loans requires applicants to provide personal information:
You must provide reference information for two people you’ve known for at least three years, including their:
Your references must live in the United States, and the first should be a parent or guardian.
You need references for your student loans to help the U.S. Department of Education contact you if they can’t reach you. Your references won’t be required to repay your loan.
The educational institution determining your eligibility to receive the loan will complete this section, including:
The school will also confirm the borrower’s name and Social Security number in this section.
This part of the MPN details the legal terms you agree to when signing the document and taking out the loan. Ensure you understand this section before completing the master promissory note because your loan servicer will hold you to these terms.
By signing, you are agreeing to the following:
This section describes the laws that apply to the MPN, the types of loans you can receive under the MPN, the amount you may borrow, and how you will receive your loan money.
It also includes details on using the MPN to take more than one loan, your right to cancel all or part of a loan, when you must immediately repay your loan in full, and information ED reports about your loan.
It also discloses the following terms of your loan, which we describe in more detail below:
This is where the ED provides notices about the Gramm-Leach-Bliley Act (regarding the use of nonpublic personal information), the Privacy Act, the Financial Privacy Act, and paperwork reduction.
You’ll receive a Borrower’s Rights and Responsibilities Statement with the MPN to help you understand your rights and responsibilities under the agreement.
This includes laws that apply to the MPN and further information from the terms and conditions.
This section contains instructions to fill out the master promissory note.
For Direct PLUS student loans, you’ll answer the same questions as the MPN for Subsidized and Unsubsidized loans, and you’ll provide several additional details.
You’ll authorize ED to investigate your credit record. If you have an adverse credit history and require an endorser, you’ll only be eligible for one loan under your MPN. An endorser is like a cosigner: someone who agrees to repay the loan if the borrower doesn’t.
You must provide parent or guardian citizenship status and the dependent undergraduate student’s information for Parent PLUS loans. Graduate students applying for PLUS loans don’t need to provide parent information.
You must also certify you’re one of the following:
The Borrower’s Rights and Responsibilities statement includes a note to the endorser. Endorsers of a Direct PLUS loan aren’t entitled to the same benefits as the borrower, nor do all terms and conditions apply to them.
Read the Borrower’s Rights and Responsibilities statement for information specific to endorsers.
You have options for executing a master promissory note: online at StudentAid.gov or on paper. If you request a paper MPN, you have the right to one.
You can complete your MPN independently without your parents or your school’s financial aid department. Parents don’t need the student’s involvement to execute a master promissory note for Parent PLUS loans.
If you have questions, contact your school to ensure you complete the document correctly.
If you are filling out your MPN online, follow these steps:
After you submit the MPN, your school will receive an electronic confirmation within three to five business days. How long it takes to get your loan depends on the school’s student loan policies. Check with your school’s financial aid department to understand its loan disbursement process.
Since a master promissory note is not specific to the school you attend, you can borrow federal student loans under your original MPN even if you transfer schools.
You will need to complete and sign an MPN if:
Executing a master promissory note means you’ve completed, signed, and submitted the form to the Department of Education for processing, linking to your loan record, and approval. You can’t get student loan funds, even with a financial aid award letter stating you’re eligible unless you execute your MPN.
If you have executed your MPN but didn’t receive a loan disbursement, and it’s been over 12 months, you must complete and sign a new MPN. It’s your responsibility to execute the MPN if you want the loan funds.
Your school may remind you as part of the financial aid checklist, but you must fill out and submit the MPN for approval; your school or the federal government will not do this on your behalf.
The information on your Master Promissory Note must match the information on your award letter so it can link to your borrower record for fund disbursement.
The electronic MPN won’t allow you to submit it without the required information, but paper MPNs have higher rejection rates due to illegibility or missing information. Your school will get a notice from the Department of Education accepting or rejecting your completed MPN.
Reasons your MPN may be rejected include the following:
Talk to your school’s financial aid department to determine the status of your MPN and get information on your loan disbursement.
The student loan master promissory note is essential for obtaining financial aid from the federal government to attend school. It establishes a binding agreement between the borrower and the lender.
Be sure to fully and accurately complete the appropriate Master Promissory Note for your loan type and execute it to have your federal student loan disbursed to your school.
To maintain our free service for consumers, LendEDU sometimes receives compensation when readers click to, apply for, or purchase products featured on the site. Compensation may impact where & how companies appear on the site. Additionally, our editors do not always review every single company in every industry.
