A promissory note is a legal agreement between a borrower and a lender that specifies the terms and conditions of the loan, including the amount borrowed, the interest rate and repayment terms. The borrower agrees to repay the loan according to these terms and conditions.

Rather than require a borrower of federal student loans to sign a new promissory note each academic year, the borrower can sign a Master Promissory Note (MPN) just once. The MPN is good for all federal student loans received at the college during a continuous period of enrollment of up to 10 years. Each college or university requires a new MPN the first time a borrower obtains federal student loans at the school.

A PLUS Loan borrower will also be required to sign a new MPN if an endorser was required for the previous year. An endorser is good for only one academic year’s loans.

A separate MPN is also required for Direct Subsidized and Unsubsidized Loans and PLUS Loans. The parents must sign a separate MPN for each student on whose behalf they are borrowing a Parent PLUS Loan.

In addition to the borrower’s name and contact information, the MPN will require the names and contact information for two references. The references are not used to vouch for the borrower's character. Rather, the references should be people who will always know the borrower's current address, in case mail to the borrower is returned as undeliverable. The first reference on the student’s MPN should generally be the student’s parent or guardian. The two references listed on the MPN cannot both have the same mailing address. All of the references must live in the U.S.

The MPN does not show a specific federal student loan amount, as the loan amount is provided in the financial aid award letter or other communications from the school. Signing a MPN does not obligate the borrower to accept a loan. The borrower always has the ability to reduce or decline the loan. If the borrower accepts the federal student loan, it will be subject to the terms and conditions of the MPN.

Before the student can receive funds from a federal student loan, he or she must sign the Master Promissory Note. Borrowers can sign the MPN at StudentLoans.gov using an FSA ID. Borrowers can also ask the college’s financial aid office for a paper version of the MPN.

After signing the MPN, the borrower should print and keep a copy of the MPN for his or her records.