In this topic, we cover:
- What is the Master Promissory Note (MPN)?
- Your rights regarding your education loans.
- Your responsibilities when accepting an education loan.
When applying for federal Direct and Direct PLUS loans, you must sign a Master Promissory Note (MPN) before you receive your first check. The MPN is a legally binding contract in which you (and your co-signer, if applicable) agree to repay the loan money borrowed.
The Master Promissory Note describes borrower rights and responsibilities, including the terms and conditions of the loan, repayment schedule, interest rate, and the deferment/cancellation policies. It's extremely important to be familiar with the terms of your Master Promissory Note. By signing it, you not only agree to repay the money you borrow, but you also agree to all terms and conditions included. If you have any uncertainty or questions about any of the terms or conditions, you can visit studentloans.gov for more information about the promissory note. Remember that all federal education loans (Direct and Direct PLUS) are lent by the federal government, not by private lenders.
Once you sign your Master Promissory Note, a new one is generally not required for any new loans.
After signing your Master Promissory Note, you should direct all loan questions to the loan servicer, not your financial aid office. The servicer will provide a customer service phone number and website address.
Your Rights
If you were to review your Master Promissory Note, you would see that you have a number of borrower rights. While these rights will vary for non-governmental loans, federal loan borrowers are entitled to the following rights:
- The right to prepay any loan (including Direct, Perkins, Direct PLUS or consolidation loans) without penalty. At any time, including while attending school, borrowers are able to either make payments towards the loans or pay more than what is required.
- The right to request a copy of the MPN.
- The right to request that the repayment plan be changed.
- The right to request that the lender reduce or postpone payment through deferment or forbearance. Additionally, without requesting, the lender will automatically provide grace and interest subsidies on the appropriate loans.
If there are any questions about these rights, contact your loan servicer.
Your Responsibilities
The Master Promissory Note details borrower rights as well as responsibilities, and to sum it up: a borrower's primary responsibility is to pay loans back and pay them back on time.
Payments are required whether you receive a statement or not - so be sure to notify your servicer (or servicers) when your address changes. If you forget, they will still expect an on-time payment. Missed payments may harm your credit and possibly lead to higher interest rates on some loans.
The repayment of your student loans is a serious obligation. Payment is still generally required:
- Whether or not you complete your program or complete it in the expected amount of time.
- Whether or not you feel satisfied with your education experience.
- Whether or not you are satisfied with the school's programs and services.
- Whether or not you received the purchased program or services.
- Whether or not you are able to obtain employment.
Stated simply - your student loans must be repaid.
