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What's a Master Promissory Note? Thumbnail

What's a Master Promissory Note?

The college application process is full of unusual lingo, but one term that is especially important to familiarize yourself with is the Master Promissory Note (MPN). In short, it is a legal document that your student signs promising to pay back both their student loans along with any interest accrued to the US Department of Education after graduation.

It is traditionally due after your child signs their acceptance at the school of their choice. By signing, the student agrees to take on federal loans, and direct the federal government on which school to send the funds from the loan. While many busy high school seniors would rather do something else than read through the full details of the MPN, it will impact your child for decades.

First off: Why is it important to know about this now?

If you were reading closely, you saw that the MPN is not due until after acceptance, so you would figure after May 1st.  However, we’ve recently seen a small percentage of schools prompting students to complete the Master Promissory Note once students receive their financial aid award letter to “finalize an award offer”. This means that instead of waiting until May 1st to prompt students, a small percentage of schools are reaching out to students with their aid packages to complete this form now.

When you complete the MPN, you’ll notice that you have to choose one school to send the funds. If the MPN is skimmed through, and signed off with a school that is not top choice for your child, it may be creating a headache for down the road. Our advice: Wait until after May 1st to complete the MPN.

Using the Master Promissory Note as a learning piece:

While we encourage you to exercise caution before signing the MPN, there is some really helpful info on the form that can be valuable to your child.

For the 17- or 18-year old student, he/she is agreeing to take on thousands of dollars in federal loans. With so much at stake, the form provides an opportunity to educate the student on the details of these federal loans including:

  1. Individual loan limits
  2. Uses of loan money
  3. How repayment works
  4. Estimates of future monthly loan payments

These are all really important pieces of the college financing for your child to know, so that when they do graduate, they have a sense of what to expect from their student loans. Providing your child with an understanding of their federal loans can go a long way to shape expectations and help plan for your child’s finances post grad. After all, it is the not-so-distant future!

If you have questions about your child’s situation and Master Promissory Notes, feel free to reach out. I’m here to help!


All the best,


Andrew Holmes, Certified College Planning Specialist™




Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions, LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.

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