Before you receive your loan funds, you need to sign a promissory note. What is it? Well basically, it’s the contract between you and the holder of your loan. You sign it to say that you’re agreeing to pay back what you borrow from them.
In most cases, you’ll sign only one promissory note that will be used for all of your loans at a single school. This type of note is called a Master Promissory Note (MPN).
When you sign the MPN, you’re confirming your understanding that your school may make new loans for you (don’t worry, they have to talk to you about this) for the duration of your education (up to 10 years) without having you sign another promissory note. You are also agreeing to repay to the holder of your loan and the U.S. Department of Education all the loans given to you under the terms of the MPN. So it’s really important that you read and understand all of the information on the MPN before you sign it.
So you know, you’re not required to accept the amount that your school offers you. You should let your school know if you want to borrow a lesser amount than the school has awarded you.
Your school must notify you either in writing or electronically whenever it makes a loan disbursement. The notice must tell you the date and the amount of the loan disbursement, which loan funds are subsidized and which are unsubsidized, information about your right to cancel all or a portion of the loan, including the current loan disbursement, and procedures for canceling the loan.