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August 20, 2010

Master Promissory Note

After accepting your award package, signing your Master Promissory Note (MPN) is the next step you’ll take when you apply for financial aid. 

Your MPN is a contract between you and your lender. It outlines your rights and responsibilities as a borrower. There are separate MPNs for Stafford, Perkins, and PLUS loans.

What Are the Benefits of the MPN?

The MPN provides many benefits:

  • Per loan type, it may cover all your borrowing needs for your entire academic program with a single promissory note.
  • The MPN simplifies the loan application process and reduces the amount of paperwork you have to keep track of.
  • Your instructions for deferment, repayment, and capitalization of interest will be consistent for all loans covered by the MPN. If there are any changes, an Addendum explaining those changes will be sent to you.

How Long Is the MPN Valid?

As of July 1, 2010, all federal Stafford and PLUS student loans will come from the U.S. Department of Education. If you had loans under the Federal Family Education Loan Program (FFELP), you will have to sign a new MPN for any loans you need to be disbursed after July 1, 2010—new loans will now be originated through the Direct Loan program (DL). 

Colleges may use the MPN as either an annual (single-year) note or a serial (multi-year) note. In general, once you sign an MPN it is valid for 10 years unless one or both of the following occur:

  • No disbursements are made on the existing MPN within 12 months of the date you signed it.
  • You request in writing that no more loans are to be made using the existing MPN.

What Happens if I Transfer?

You may have to complete a new MPN if you transfer to a different college. Check with your school’s financial aid office for more information.

What Other Forms Are Included?

The Borrowers' Rights and Responsibilities form will be provided with your MPN. You will also receive a Disclosure Statement, which you can print when you sign your MPN electronically. The Disclosure Statement is a reminder that you must repay your loan.

The Disclosure Statement also highlights about your federal student loan, including:

  • Loan principal amount
  • Origination fee
  • Insurance premium fee
  • Cumulative principal debt for loans made by your lender
  • The name and address of your lender
  • Net amount of each scheduled disbursement
  • Expected date of each disbursement

Keep Track of Your Loan Information

Remember to keep a copy of your MPN(s). That way, when you begin repayment, you’ll have your loan terms handy. Your MPN(s) will help you keep track of the types of loans you have, their specific terms and conditions, and when you should expect to begin repayment. It’s a good idea to set aside a folder to keep all of your student loan information in one place—it may save you a hassle later.