What Is a Master Promissory Note?

People who are looking to borrow money on more than one occasion may be asked to sign a master promissory note. This document allows lenders to expedite loan requests and eliminate the need for new promissory notes for every loan. Although master promissory notes can be used for any kind of loan, they are primarily used for student loans.

Master Promissory Note

A master promissory note is essentially a reusable loan document, including the terms of repayment. This legally binding agreement simplifies the process for a borrower to assume additional debt. Master promissory notes are different from regular promissory notes, which cover only one obligation.

Benefits

A person may only have to sign one master promissory note to cover multiple loan agreements, instead of filling out an application for each request. Once approved, the lender essentially extends a line of credit to the borrower, who can withdraw the funds as needed.

Expiration date

A master promissory note may be valid for up to 10 years.

Misconceptions

Although you may not need to sign a new MPN for years, students and/or parents must file a FAFSA (Free Application for Federal Student Aid) each time they request a new loan.

Warning

Master promissory notes may not be valid at every institution. You will have to sign a new MPN if you're attending another school that uses a different form.

References

• KeyBank
• Master Promissory Notes
• Complete the e-MPN

Resources

• California State University Northridge