FAFSA: Loan Repayment and the MPN
Master Promissory Note
In the case that all or some portion of your awards are made up of loans, you will have to complete a Master Promissory Note (MPN). The MPN is a legal agreement that specifies the terms and conditions of the repayment of your loan. Be sure you’ve read your terms thoroughly; by signing you are entering into a legal and binding agreement.
Typically the MPN can be used for a period of up to 10 years depending on the loan type and school policies (only pertains to federal student loans). Students often will have to borrow several loans throughout the duration of their academic career, reusing the MPN over this period of time alleviates the need to re-apply each time a new loan is needed.
Loan Repayment
Know your responsibilities as a borrower before you sign. By signing a promissory note, you are bound to legally repay the loan regardless of whether or not you complete your education. Furthermore, the note outlines that you must repay your loan even if you cannot find employment after you’ve graduated or if you are displeased with the education you’ve received.
In the event that you do not repay your loan according to the terms outlined in the promissory note, you will go into default. This can seriously affect your credit rating and cause you to go to collections. As the borrower, it is your responsibility to make payments in a timely fashion, regardless of whether you have received your bill. Billing statements are mailed to you as a convenience and reminder for you to make your payment.
You must keep the lender aware of any changes that may have occurred in your life. You are required to inform your lender if you have graduated, dropped out of school, dropped below half time status, changed address, changed personal information (such as your SS number or your legal name) or changed schools.
If you are suffering from a financial hardship that has hindered your ability to make your payments, you may apply for a forbearance or deferment. Be sure you do this well before you are at risk of going into default as the qualification process may take time. You are required to continue making payments on your account until your forbearance or deferment status is granted.
As the borrower, you are entering into a legal agreement that you will be bound to so long as you hold the loan. Knowing the risks involved and your options is important. The more informed you are, the smoother your borrowing experience will be.
