Do You Have to Do a MPN Every Year?

A Master Promissory Note (MPN) is a legally binding agreement that borrowers sign to receive federal student loans. This document confirms a borrower’s promise to repay the loan amount, including interest and any applicable fees, to the U.S. Department of Education. A common question arises regarding whether a new MPN is required annually for federal student loans.

Purpose and Validity of the Master Promissory Note

The MPN establishes the terms and conditions under which a borrower agrees to repay federal student loans. It outlines borrower responsibilities, repayment obligations, and rights associated with the loan, including details regarding interest rates, loan origination fees, and repayment options.

For most federal student loans, specifically Direct Subsidized and Unsubsidized Loans, a single MPN can remain valid for an extended period, generally up to 10 years. This extended validity applies as long as the borrower continues to receive loan disbursements within 12 months of signing the MPN and remains enrolled at the same school. It also applies if the borrower continues to receive the same type of loan.

This multi-year feature means borrowers typically do not need to sign a new MPN each academic year. The MPN is designed to cover multiple loans of the same type over a period, streamlining the borrowing process for students. Once signed, it acts as a reusable contract for future loans within that category, provided the initial conditions for its validity are met.

Circumstances Requiring a New MPN

Despite the general extended validity, several situations necessitate signing a new Master Promissory Note. One common scenario is when a borrower receives a different type of federal student loan. For instance, a Direct PLUS Loan requires a separate MPN distinct from the one used for Direct Subsidized or Unsubsidized Loans.

A new MPN is also typically required if a student transfers to a new school. Additionally, if a borrower’s previous MPN is older than 10 years, a new one must be completed.

Schools also retain the discretion to require a new MPN for administrative reasons. A lapse in enrollment might also necessitate a new MPN upon re-enrollment, particularly if no disbursements occurred within a year of signing the original MPN.

Ensuring Continued Loan Eligibility

Failing to complete a new Master Promissory Note when required can directly impact the disbursement of federal student loan funds. If a new MPN is necessary and not on file, loan funds may be delayed or canceled.

Borrowers should promptly respond to any communications from their school’s financial aid office or loan servicer regarding MPN requirements. Completing the necessary documentation ensures access to financial aid. A valid MPN must be in place for any funds to be disbursed.