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Paying for College

Word of the Day Wednesday: Promissory Note

Each Wednesday, MEFA will feature a Word of the Day, in which we’ll highlight a word (or sometimes a phrase) related to the college planning process. This summer, we’re focusing on vocabulary related to college loans, and will highlight words you may come across on your loan application, solicitation disclosure, or a lender’s website.

Today’s Word of the Day is Promissory Note (Loan Agreement).

A Promissory Note is a legally binding document that every college loan borrower signs pledging that he or she will repay the loan under the agreed-upon conditions of repayment. The Promissory Note lists the amount borrowed, the interest rate on the loan, the person borrowing the loan, and the schedule of repayment.

Why does this matter to you?

As a borrower, signing a Promissory Note obligates you to repay the loan on time and in full. If the loan is not repaid, you will end up in default and your credit will be negatively affected.
MEFA’s Promissory Note is the called the MEFA Loan Agreement. If your family borrows a MEFA loan, both the student and parent will need to sign the MEFA Loan Agreement, and both are responsible for the loan repayment.

For more information on MEFA loans, and to apply, visit our website.

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