What Is a Student Loan Master Promissory Note?

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:

• What is a master promissory note for student loans?
• What does a master promissory note look like?
• How to execute a master promissory note
• When do I need to sign a master promissory note?
• What happens if a master promissory note is never executed?

What is a master promissory note for student loans?

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. 

Promissory notes vs. master promissory notes

A promissory note includes the following: 

• Lender’s and borrower’s names and contact information
• Initial loan amount and interest rate
• Signatures from both parties

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 need to be issued for other loan types, including every private student 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.

What does a master promissory note look like?

Source: StudentAid.gov

The two types of master promissory notes are: 

• MPN for Direct Subsidized and Unsubsidized Loans—For undergraduate students. Eligible graduate and professional students may only receive Unsubsidized Loans.
• MPN for Direct PLUS Loans—For graduate and professional students, as well as parents of dependent undergraduate students.

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.

Borrower information

Source: StudentAid.gov

An MPN for student loans requires applicants to provide personal information: 

• Name
• Address
• Social Security number
• Date of birth
• Driver’s license state and number 
• Email address 
• Telephone number

Reference information

Source: StudentAid.gov

You must provide reference information for two people you’ve known for at least three years, including their: 

• Name
• Address
• Phone number
• Relationship to you
• Email address (optional)

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. 

School information

Source: StudentAid.gov

The educational institution determining your eligibility to receive the loan will complete this section, including: 

• School name and address
• School code or branch
• Identification number

The school will also confirm the borrower’s name and Social Security number in this section. 

Borrower request, certifications, authorizations, and understandings

Source: StudentAid.gov

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:

You request

• A total amount that does not exceed the maximum amounts you are eligible to receive

You certify that

• The information you provided on the form is accurate and up to date. 
• You will only use the loan for authorized education expenses.
• You have arranged repayment for Federal Perkins Loans or defaulted federal student loans.
• If you’ve been convicted of, or pled no contest or guilty to, a fraud crime regarding federal student aid, you’ve fully repaid the funds.

You authorize

• Your schools and the Department of Education (ED) to release information about your loan to the references you provide and to immediate family members (unless you submit in writing other directions).
• Your schools and ED to contact you about your loan or loan repayment at your provided cellphone number.

You understand 

• Your school can apply the loan money to what you owe the school and refund the rest to ED.
• You may repay accrued interest while you attend school and during the grace period, deferment, and forbearance. But if you choose not to, this interest can be capitalized (added to the principal balance of your loan) after the period ends. 
• ED may verify the information you provide on the MPN with other federal agencies and provide information on your loan to others as permitted by law.
• Your school will notify you of the type of loan and amount you’re eligible to borrow.
• You can cancel or request a lower amount for the loan by contacting your school or returning the funds (within specific time frames).
• You may take multiple federal student loans under this same MPN.
• You are entitled to a copy of the MPN and the Borrower’s Rights and Responsibilities Statement.

You promise

• To repay the total amount of all loans received under the MPN plus interest and fees.
• If you don’t pay the loan when due, you will pay reasonable collection costs.
• You will not sign the MPN before reading all of it.
• You read, understand, and agree to the terms.

MPN terms and conditions

Source: StudentAid.gov

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: 

• Interest rate
• Periods when interest is charged
• Loan fee
• Late charges and collection costs
• Grace period
• Repayment
• Defaulting

Important notices

Source: StudentAid.gov

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.

Borrower’s rights and responsibilities

Source: StudentAid.gov

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. 

Instructions

Source: StudentAid.gov

This section contains instructions to fill out the master promissory note. 

Additional sections on Direct PLUS student loans MPN

Source: StudentAid.gov

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:

• A graduate or professional student.
• A biological or legally adoptive parent of the student.
• The spouse of the student’s biological or legally adoptive parent, considered a parent according to the FAFSA.

Direct PLUS loan endorser rights and terms

Source: StudentAid.gov

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. 

How to execute a master promissory note

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. 

Steps to complete an MPN

If you are filling out your MPN online, follow these steps: 

1. Navigate to www.studentaid.gov.
2. Enter your FSA ID and password. Note: Parents completing an MPN for Parent PLUS loans must sign in with their FSA ID (used to sign the student’s FAFSA), not the student’s FSA ID, or the MPN will be rejected.
3. Select “Complete Aid Process,” then “Complete Master Promissory Note.”
4. Choose the type of MPN you’re completing. Be sure to refer to your award letter as it determines what type of loan(s) qualify under this MPN document.
5. Fill out the relevant school and borrower information.
6. Read through the Terms and Conditions agreement.
7. Sign the MPN.
8. Once completed, you’ll receive a confirmation message and email message verifying your submission.

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. 

When do I need to sign a master promissory note?

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:

• You are borrowing a federal student loan for the first time.
• You are borrowing a different kind of federal student loan than your current MPN.
• Your school requires you to sign a new MPN every year.
• You signed an MPN more than one year ago, but the loan was not disbursed.
• You haven’t signed an MPN in more than 10 years and want to take out a new loan.

What happens if a master promissory note is never executed?

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.

Reasons for MPN rejection

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:

• You filled out an MPN for the wrong loan type.
• Parents completed a Parent PLUS loan MPN using the student’s FSA ID.
• Paper MPN is missing required information, signature is not original, legal text is missing, text is altered, or signed MPN is a photocopy or marked as copy or non-negotiable.
• Information provided does not match the borrower’s record (i.e., Social Security number; first name).

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.