Applying for and managing your student loans is complicated, especially when it comes to figuring out requirements like Master Promissory Notes. MPNs are a contract that you sign during your initial federal student loan application. When you sign your MPN, which certifies your agreement that you will pay back these student loans, you may be asked for two personal references.
TL;DR (Too Long; Didn't Read)
When it comes to Master Promissory Notes, references are required so the lender has a way to locate you if you default on your loan.
The Master Promissory Note
The MPN is an agreement that you will pay back all of the federal loans you take out to fund your education. At its most basic, the MPN makes it easier for you to take out more loans because you don't have to re-sign a promissory note for each individual loan you take out, even if you switch schools. Adding personal references is an added layer of security for the lender as they offer you loans over this extended period of time.
Changes in Address
College life involves a lot of change. You will likely live in different dorms and apartments, and you might even travel abroad or move across the country to a different school. These changes are one of the reasons why your lender will ask you for personal references. Because the MPN has a 10-year life, it is important that the lender is able to find you. Your personal references are a way for your lender to locate you.
Personal Reference Requirements
When you fill out the MPN, the document will require the names, addresses and phone numbers of your references. You don't have to pick a family member, but many students find it easiest to use a parent as one of the personal references. The first and second references must live at separate addresses, which means that you may need someone other than a parent to serve as your second reference. You may wish to use a grandparent, an adult sibling or even a close friend. Always make sure to ask your references for permission to use their names. MPN references are not responsible for any payments on the loan, even if you default. They are merely contacts that the lender can use to locate you.
Exit Interview References
When you graduate, you must complete a loan-counseling exit interview. Without the interview, the school may refuse to issue your diploma or your transcripts or return any student-account refunds. As part of the exit interview, you fill out a certificate that states the size of your total Stafford Loan, the interest and estimated monthly payment for your debt and the name, address and phone number of your employer, if you've landed a job. You must also give contact information for three references, one of whom should be your nearest relative. Just like MPN references, these references are merely so that your lender can locate you. They do not create any responsibility for the references to make payments on the loans, even if you default.
Bea is a personal finance and legal writer based in Texas.