My school said it was necessary. It seems like I’m the only one without a clue as to what that is
✅ Answers
- A Master Promissory Note is a document that spells out the terms of your federal student loans. When you sign it, it becomes the binding contract for your loans. It is necessary because if you don’t complete and sign it, you can’t receive your loans.The MPN differs from most private loan contracts in that it can cover more than one loan. Usually it is good for years, and any student loans you take out during that time can be loaded onto it. (You do have the option to limit it to year if you choose, but then you will have to do a new one every year). This multi-year, multi-loan feature saves you the trouble of having to do a new loan document every time there is a change. Since most students have at least loans per year, and often there are changes to them during the year, this saves you a lot of time and paperwork.
Because the MPN is the loan document for all your federal student loans, it won’t specify a particular loan amount. The amounts are listed on the award letter you receive each year (or each time a change is made). Usually the award letter has a feature that allows you to either accept or decline all, or any part of, the loans that are offered. It should also detail when the loans are scheduled to be disbursed (usually in at least disbursements). You always have the option to refuse a disbursement, and you can even refuse one after it has been made (within limits), so you’re never stuck having to borrow money if you don’t want to.
Although the MPN is long and tedious to read, it’s a good idea to do so because it explains in detail everything you need to know about your rights and responsibilities as a borrower.