What Is a Student Master Promissory Note?

A Master Promissory Note (MPN) for student loans is a legally binding agreement between a borrower and the U.S. Department of Education. It serves as a formal promise to repay federal student loans, including principal, interest, and any associated fees. This document enables the disbursement of funds for educational expenses, and one signed MPN can cover multiple loans over time.

Understanding the Master Promissory Note

The MPN functions as a multi-year, legally binding contract that streamlines the federal student loan borrowing process. It allows a single agreement to cover several loans obtained for different academic years, simplifying the administrative burden for both the borrower and the Department of Education.

The MPN is used for various federal student loan types. These include Direct Subsidized Loans for eligible undergraduate students demonstrating financial need, where the U.S. Department of Education pays the interest while the student is in school at least half-time, during the grace period, and during deferment periods. Direct Unsubsidized Loans are available to undergraduate, graduate, and professional students regardless of financial need, with interest accruing from the time the loan is disbursed.

Direct PLUS Loans, including Graduate PLUS and Parent PLUS loans, are also covered by the MPN, allowing graduate or professional students and parents of dependent undergraduate students to borrow up to the cost of attendance, less any other financial aid received. An MPN can be valid for up to 10 years, even if the student attends different schools.

Preparing to Sign Your MPN

Before signing your Master Promissory Note, gather specific information and ensure you have the necessary access. The MPN is completed online through the Federal Student Aid (FSA) website, studentaid.gov. To access and sign the document, you must have an FSA ID, which serves as your legal electronic signature. If you do not have an FSA ID, create one on the website first.

You will provide various personal details to complete the MPN, including your full legal name, Social Security Number, date of birth, permanent address, phone number, and email address. You will also select the school you plan to attend or are currently attending.

The MPN also requires information for two separate references. These individuals must have different U.S. addresses from each other and from the borrower, and they should have known the borrower for at least three years. For Parent PLUS MPNs, the references cannot be family members. These references assist the loan servicer in locating the borrower if contact is lost during the repayment period. Having your financial aid award information readily available is beneficial to confirm you are signing for the correct loan type and amount.

Signing and Completing Your MPN

To sign and complete your MPN, log into studentaid.gov using your FSA ID. Navigate to the “Complete Aid Process” section or a similar link to find the Master Promissory Note option.

Select the specific type of MPN you need to complete, such as the Direct Subsidized/Unsubsidized Loan MPN, Grad PLUS MPN, or Parent PLUS MPN. After selecting the correct form, review the pre-populated fields to ensure all information is accurate.

Your FSA ID acts as your electronic signature, legally binding you to the terms and conditions of the MPN. After reviewing and confirming all details, submit the completed MPN online. A confirmation page or email will typically be provided upon successful submission.

Your Obligations Under the MPN

By signing the Master Promissory Note, you agree to repay the loan principal, along with all accrued interest and any associated fees. Interest begins to accrue on your loan from the day funds are disbursed to your school. For subsidized loans, the government generally pays the interest while you are in school at least half-time and during grace and deferment periods. Federal student loan interest rates are fixed for the life of the loan, meaning they will not change over time.

Most federal student loans include a grace period, typically six months, after you graduate, leave school, or drop below half-time enrollment before repayment begins. Direct PLUS Loans for graduate students also generally have a six-month grace period, while Parent PLUS Loans require the borrower to request a deferment for a similar period. Keep your contact information updated with your loan servicer, as they provide details about your loan balance and repayment options.

Failing to make payments on your federal student loans can lead to serious consequences. If a payment is missed, your loan becomes delinquent. If payments remain unmade for an extended period, typically 270 days, your loan can enter default. Defaulting on a federal student loan results in the entire unpaid balance becoming immediately due, a process known as acceleration. This can damage your credit score, making it difficult to obtain future credit like car loans or mortgages. It can also lead to the withholding of federal tax refunds or benefit payments (Treasury offset), wage garnishment, and loss of eligibility for future federal student aid. Options such as deferment, forbearance, or income-driven repayment plans exist to help manage repayment if you experience financial hardship.