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Amazon got $600 million in tariff refunds after a lawsuit accused it of favoring Trump



For months, Amazon would not say whether it planned to seek a refund on the tariffs President Donald Trump imposed under emergency powers. In May, that silence became a legal problem when consumers filed a class-action lawsuit in federal court in Seattle, arguing they were owed refunds for paying tariff-inflated prices and alleging the company wasn’t seeking refunds in order to “curry favor” with Trump.

On Thursday evening, CFO Brian Olsavsky disclosed the company received $600 million in tariff refunds during the second quarter and pledged to automatically issue reimbursements to consumers under a “limited set of circumstances.”

“We are participating in the tariff refund process, and as I mentioned earlier, we received approximately $600 million in Q2. The amount is limited for a couple reasons. First, our teams did a lot of work forward-buying and prepositioning inventory to avoid tariff costs. Second, we are not the importer of record for the large majority of items sold in our store given suppliers typically handle imports and pay relevant tariffs,” Olsavsky said on the call.

“In cases where we did see an increase in costs due to tariffs, we largely absorbed those costs rather than pass them on to customers.”

In January, Amazon CEO Andy Jassy said tariffs were starting to push up prices on the platform. Amazon and many of its third-party sellers had stocked up on inventory ahead of the tariffs to keep prices flat, Jassy said, but most of that supply ran out the previous fall.

“You start to see some of the tariffs creep into some of the prices, some of the items, and you see some sellers are deciding that they’re passing on those higher costs to consumers in the form of higher prices, some are deciding that they’ll absorb it to drive demand, and some are doing something in between,” Jassy said. “I think you’re starting to see more of that impact.”

Jassy also said there were limits to how much Amazon and its sellers could shield shoppers from the added cost.

“At a certain point, because retail is, as you know, a mid-single digit operating margin business, if people’s costs go up by 10%, there aren’t a lot of places to absorb it,” he said. “You don’t have endless options.”

Amazon’s tone marked a shift from the prior year, when Jassy had said prices had not risen appreciably after Trump first announced the tariffs.

Some of it is going back into your pocket

The refund total was smaller than some expected. Olsavsky said Amazon’s total was limited because the company stockpiled inventory in anticipation of tariffs, and because Amazon is not the importer of record for most items sold in its store.

“We have identified a limited set of circumstances where we can trace that we passed specific import charges on to customers, and when we receive those refunds, we will proactively contact affected customers and automatically issue refunds to them. Otherwise, like other large retailers, we’ll utilize refunds to continue to invest in low prices for customers,” Olsavsky said on the call.

Where Amazon can draw a direct line between a tariff charge and what a customer paid, the company says it will act without requiring a claim.

“We have identified a limited set of circumstances where we can trace that we passed specific import charges onto customers, and when we receive those refunds, we will proactively contact affected customers and automatically issue refunds to them,” Olsavsky said. Money that can’t be traced to a specific purchase will go elsewhere: “Otherwise, like other large retailers, we’ll utilize refunds to continue to invest in low prices for customers,” he said.

Outside sellers account for more than 60% of goods sold on Amazon’s marketplace. Many of those third-party sellers, who import goods from overseas, were forced to raise prices due to the tariffs and have since applied for their own refunds. Some sellers who tried to pass tariff costs on to shoppers earlier this year said Amazon penalized their listings for it, pulling the “Add to Cart” button from their product pages before later easing off.

The refunds trace back to the courts, not to the lawsuit against Amazon. They stem from a February Supreme Court ruling that struck down the broad tariffs Trump imposed under the International Emergency Economic Powers Act of 1977, which required the government to repay duties collected from importers.

The Trump administration has since pushed back on how those refunds are being handled, arguing in court filings a judge overstepped his authority in ordering universal refunds for all eligible importers. The U.S. Treasury paid out $49.2 billion in customs refunds in June alone, more than double the roughly $22 billion disbursed the previous month. Combined May and June payouts accounted for roughly 42% of the estimated $166 billion in IEEPA-based duties owed back to importers, according to Reuters.

Amazon isn’t alone in facing the question of what to do with the money. Walmart said it would prioritize using the proceeds to invest in prices. Costco indicated it intends to pass at least some of its refund money back to customers, though the retailer acknowledged that exactly how much and on what schedule remained uncertain. Apple said Thursday its earnings per share were lifted by 11 cents from tariff refunds in its third quarter.

Freddie Mac’s strongest quarter in years: what drove the 61% surge


Bill Pulte, director of the Federal Housing Finance Agency (FHFA) and chairman of Freddie Mac’s board of directors, said the results reflected what he described as disciplined execution.

“Net income was $3.8 billion, driven by strong revenues, a credit benefit and continued cost discipline,” Pulte said in a statement.

Non-interest expense fell 3% year-over-year to $2.1 billion, reflecting what Freddie characterized as continued operational efficiency.

Credit release reshapes the bottom line

The credit benefit of $880 million — versus an $783 million provision in the second quarter of 2025 — was the clearest driver of the year-over-year swing.

Chief financial officer James Whitlinger, executive vice president at Freddie Mac in McLean, Virginia, attributed the release to updates in the company’s process for modeling future house price scenarios.

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Master Promissory Notes (MPN): What To Know


Key Points

  • An MPN is a legally binding promise to repay your federal student loans, and one MPN can cover up to 10 years of borrowing.
  • The MPN does not lock in a specific repayment plan. It locks in your obligation to repay under whatever the Higher Education Act says at the time.
  • Moving loan servicing or collections to the Treasury Department does not void your MPN. The federal government still owns the debt.

Every federal student loan borrower signs a Master Promissory Note (MPN), spends about four minutes on it, and never looks at it again.

With all the student loan changes, that’s borrowers question what they actually signed. Millions of borrowers are discovering that the repayment plan they counted on no longer exists, and a lot of them are going back to a document they signed years ago looking for a guarantee that isn’t in there.

The MPN is a contract, and it’s the single most important document in your student loan borrowing life. But it works differently than most people assume. It doesn’t set the rules in place on the day you sign — it points to federal law and moves when federal law moves.

Understanding that distinction is what separates borrowers who pick the right repayment plan from borrowers who get blindsided by a deadline.

Here’s what the MPN actually says, what can legally change, and what can’t.

Table of Contents

What Are Master Promissory Notes?
What Does The MPN Contain?
The Repayment Plan Section Doesn’t Work The Way People Think
How The Department Of Education Can Legally Change Your Repayment Options
“If My Loans Move To Treasury, My MPN Is Invalid Because It’s With The Department Of Education”
How To Complete A Master Promissory Note
What Happens After Signing The MPN?
Final Thoughts
Master Promissory Note FAQs

What Are Master Promissory Notes?

A Master Promissory Note (MPN) is a legally binding document in which a federal student loan borrower promises to repay their loans, plus interest and fees, to the U.S. Department of Education. It’s the contract that sits underneath every federal loan you take out, and it’s the reason federal loans work so differently from private loans.

You have to sign an MPN before you can receive any federal student loan money. But you don’t sign a new one every year. A single MPN can cover multiple disbursements for up to 10 years, which is why most undergraduates sign once as a freshman and never think about it again.

There are three separate MPNs, and which one you sign depends on what you’re borrowing. 

If you signed an undergraduate MPN and later head to graduate school, you’ll sign a new one. And if you’re a parent borrowing for more than one child, you’ll generally sign a separate Parent PLUS MPN for each student, which is worth knowing before you compare Parent PLUS against the alternatives.

Attached to every MPN is the Borrower’s Rights and Responsibilities Statement (BRR). This is the part almost nobody reads, and it’s the part that matters most right now. Nearly everything in this article about what can and can’t change comes straight out of that document, which also happens to be the clearest statement of your rights as a federal borrower you’ll ever be handed.

Direct Loan MPN Screenshot

What Does The MPN Contain?

Master Promissory Notes are dense, but a handful of sections do most of the work.

Interest rate and how interest is charged. Your rate is fixed for the life of each loan and set by your disbursement date, which is why the rate for each school year matters so much. It matters most for unsubsidized loans, which start accruing interest the day the money hits your account.

Borrowing limits. The One Big Beautiful Bill Act (OBBBA) reset these for loans first disbursed on or after July 1, 2026, and the new federal borrowing limits are meaningfully tighter than the old ones:

  • Graduate students: $20,500 per year, $100,000 aggregate
  • Professional students (medicine, law, and other qualifying programs): $50,000 per year, $200,000 aggregate
  • Parent PLUS: $20,000 per student per year, $65,000 lifetime per student
  • Overall lifetime cap across most federal student loans: $257,500

Students already enrolled and borrowing before July 1, 2026 generally get a grandfathering window (up to three additional years or until they finish their program, whichever comes first) provided they stay in the same program at the same school. Everyone else is looking at a gap that private student loans will have to fill.

Grace periods, deferment, and forbearance. The MPN spells out your grace period and the circumstances under which you can pause payments through deferment or forbearance.

Repayment terms. The MPN tells you when repayment starts and points you to the repayment plans available under the law. Note the wording — available under the law, not “available on the day you signed.” That single phrase explains most of what happened to borrowers in 2025 and 2026, including the SAVE plan’s collapse.

The Repayment Plan Section Doesn’t Work The Way People Think

This is the biggest misconception about MPNs, and it’s worth being blunt about it.

A common misconceptions is that because the MPN is a legally binding contract, signing it gave you a permanent, guaranteed right to income-driven repayment for the life of your loan. That was always an overstatement, and the last two years proved it.

SAVE is gone. PAYE and ICR are being phased out. New borrowers as of July 1, 2026 can’t access any of them, because the Education Department finalized a two-plan system. If the MPN really locked in the repayment menu that existed on the day you signed, none of that would have been legally possible.

What the MPN actually locks in is narrower, and it’s still meaningful.

Locked in: the principal you borrowed, your fixed interest rate, the fact that this is a federal loan governed by federal law, and the due process protections attached to federal debt — notice requirements, the right to dispute the debt, and the statutory paths out of default like loan rehabilitation.

Not locked in: the specific menu of repayment plans, the terms of any individual plan, forgiveness timelines that come from regulation rather than statute, and the identity of whoever services or collects your loan. Servicer changes alone have shuffled tens of millions of accounts over the past five years without altering a single balance.

Here’s where borrowers stand in 2026:

  • Loans first disbursed on or after July 1, 2026: two options — the tiered Standard plan (10 to 25 years depending on balance) or the new Repayment Assistance Plan (RAP).
  • Loans disbursed before July 1, 2026: you keep access to Income-Based Repayment (IBR) and can also elect RAP. If you’re weighing them, our RAP vs. IBR comparison runs the math both ways. Borrowers still in SAVE, PAYE, or ICR have to move to IBR or RAP, with those plans sunsetting by July 1, 2028.
  • Parent PLUS borrowers: still the most restricted group, since Parent PLUS is excluded from RAP.

If you’re not sure where you land, start with our guide on how to pick a new repayment plan, and run the numbers with the RAP calculator before you commit. If you’re chasing PSLF, confirm your plan choice still generates qualifying payments.

How The Department Of Education Can Legally Change Your Repayment Options

If you signed an MPN in 2015 expecting REPAYE to exist forever, you might reasonably ask how the government was allowed to take it away. The answer is written into the MPN itself, in Item 1 of the Borrower’s Rights and Responsibilities Statement, the section you can pull up right now by logging into your StudentAid.gov account.

Here’s the operative language, straight from the Direct PLUS BRR:

The terms and conditions of loans made under this MPN are determined by the Higher Education Act of 1965, as amended (the HEA), and other federal laws and regulations.

And a few lines later:

NOTE: Amendments to the Act may change the terms of this MPN. Any amendment to the Act that changes the terms of this MPN will be applied to your loans in accordance with the effective date of the amendment. Depending on the effective date of the amendment, amendments to the Act may modify or remove a benefit that existed at the time that you signed this MPN.

That’s about as clear as legal drafting gets. The MPN incorporates federal law by reference rather than freezing it in place. When Congress changes the Higher Education Act, the terms of your note change with it — and the note warns you in advance that a benefit you had when you signed can be modified or removed. It’s the same reason forgiveness programs have appeared and disappeared over the years without anyone’s promissory note being reissued.

Four mechanisms actually move the terms, and they carry very different levels of durability.

1. Congress amends the Higher Education Act

This is the big one, and it’s what happened in 2025. The One Big Beautiful Bill Act (Public Law 119-21), signed July 4, 2025, rewrote the repayment section of the Direct Loan statute at 20 U.S.C. § 1087e. It created RAP, restricted new borrowers to two plans, eliminated Grad PLUS for new borrowers, and reset loan limits.

Statutory changes are the hardest to undo and the hardest to challenge, because Congress unquestionably has the power to amend the HEA. A borrower arguing that a 2015 MPN blocks a 2025 statute runs directly into the paragraph quoted above, which is why you’ll notice that even organized opposition in Congress fights these changes politically rather than contractually.

2. The Education Department writes regulations

Congress writes the statute, then ED writes the rules that operationalize it. For most Title IV student aid rules, ED must first run a negotiated rulemaking process (HEA § 492, 20 U.S.C. § 1098a) — a public committee of stakeholders that attempts consensus before a proposed rule goes out for comment. It’s the same machinery that has produced every major change to how student loans work for the past three decades.

That’s exactly what produced the current rules. ED convened the RISE Committee (Reimagining and Improving Student Education) in late 2025, published a proposed rule on January 30, 2026, and issued the RISE final rule on May 1, 2026, effective July 1, 2026. It set the mechanics of RAP, amended the IBR regulations, sunset ICR and PAYE by July 1, 2028, implemented the new loan limits, and confirmed RAP payments count toward PSLF.

Regulations are more fragile than statutes. A future administration can rewrite them through the same process, and they can be challenged under the Administrative Procedure Act, which is precisely what’s happening now.

3. Courts strike things down

This cuts both directions, and borrowers learned it the hard way with SAVE. In February 2025, the Eighth Circuit expanded an injunction against the plan, concluding that the Secretary’s income-contingent repayment authority didn’t stretch far enough to support SAVE’s structure, reasoning that also called the forgiveness provisions of PAYE and REPAYE into question. SAVE ultimately ended by court order rather than by a vote, leaving roughly seven million borrowers to scramble for a new plan.

Litigation is still shaping the current rules. Multiple lawsuits, including one brought by a coalition of 25 states and the District of Columbia, are challenging pieces of the RISE final rule, primarily ED’s narrow definition of which “professional degree” programs qualify for the higher $50,000 borrowing limit, a fight that will determine how much medical and nursing students can actually borrow.

4. What ED can’t do unilaterally

The MPN isn’t a blank check for the government either. A few limits are worth stating precisely, because they’re the ones you can actually enforce through the ombudsman or a formal complaint:

  • ED can’t rewrite your note by fiat. The MPN says no term “may be modified or waived, unless we do so in writing.” Changes have to come through statute or properly issued regulation, not a servicer phone call or a website update. If your servicer applies terms that don’t match, that’s an error, not a rule change.
  • ED can’t change your interest rate on already-disbursed loans. Your rate was fixed by statute at disbursement, which you can verify against the historical rate tables.
  • ED can’t invent an obligation that isn’t in the Act. Its authority is delegated authority, which is why SAVE lost in court.
  • ED can’t skip due process. Notice requirements, dispute rights, and the statutory paths out of default survive any reorganization.

The practical takeaway: don’t build a 20-year financial plan around a repayment benefit that lives in a regulation. Benefits written into law (like IBR and RAP) are meaningfully more durable than benefits created by a Secretary’s rulemaking, and that single distinction is the most useful thing to understand about federal student loan policy right now.

“If My Loans Move To Treasury, My MPN Is Invalid Because It’s With The Department Of Education”

This claim has been everywhere since March 2026, and it’s wrong. It’s also the kind of wrong that can cost someone thousands of dollars, so it’s worth walking through carefully — especially for the 7.8 million borrowers already in default who are most likely to hear it.

What people are claiming

The argument goes like this: the MPN is a contract between you and the U.S. Department of Education. If your loan moves to the Treasury Department, Treasury wasn’t a party to that contract, so the agreement is void, unenforceable, or has to be renegotiated. Some versions add that the debt becomes uncollectible entirely, which would make it the only federal debt in history to evaporate on a technicality.

What actually happened

On March 19, 2026, the Education and Treasury Departments signed an interagency agreement, the culmination of a plan first floated in 2025. It relies on 31 U.S.C. § 1535 (the Economy Act, which lets one federal agency buy services from another) and 31 U.S.C. § 3711(g), the debt collection provision of the Debt Collection Improvement Act of 1996.

Under it, Treasury’s Bureau of the Fiscal Service is taking over servicing of roughly $179 billion in defaulted federal student loans held by about 7.8 million borrowers through its Cross-Servicing program, absorbing the functions of ED’s Default Resolution Group and ramping up collections through the summer.

This is Phase 1. Phase 2 (the rest of the portfolio) and Phase 3 (FAFSA and Pell Grants) have been described by ED officials but carry no committed timeline, and Under Secretary Nicholas Kent has declined to provide one. As of mid-2026, only defaulted loans have actually moved, and even then ED retains authority over debt validity determinations, dispute adjudication, due process notices, and approval of rehabilitation and consolidation agreements. A full transfer would almost certainly require Congress, which is why House Republicans introduced ten separate bills to do it by statute.

Why the argument fails

The agreement itself says ownership doesn’t transfer. It states, in plain language, that “[r]eferrals made pursuant to this Attachment are for collection purposes only and do not transfer ownership of the debt from Education to Treasury.”

ED remains the legal holder and Treasury is acting as a collection agent. If you want to confirm this for your own loans, here’s how to find out who actually owns them.

Your MPN already contemplates this. Item 1 of the BRR defines its terms: “the words ‘we,’ ‘us,’ and ‘our’ refer to the U.S. Department of Education or our servicers.” And servicers change constantly — FedLoan wound down and its accounts were split among other companies, Navient’s federal portfolio went to Aidvantage, and Great Lakes accounts moved to Nelnet. Not one borrower’s balance disappeared, and nobody successfully argued their note was void.

Treasury has been collecting on defaulted student loans for decades. This isn’t new. The Treasury Offset Program is why defaulted borrowers have been losing their tax refunds since long before 2026, and there’s a long-established process for stopping those offsets. Cross-servicing authority under the Debt Collection Improvement Act dates to 1996. What changed in 2026 is scale and timing, not legal structure.

Your obligation runs to the United States, not to a specific agency. Direct Loans are funded by Treasury borrowing and are obligations to the federal government. The Department of Education simply administers the program on behalf of the United States and it isn’t a separate counterparty whose disappearance takes your debt with it.

Even in the scenario where Congress fully moves the program, the loans and their terms move with it — which is exactly what happened when hundreds of billions in FFEL loans were bought, sold, and assigned to ED over the years, without a single borrower’s obligation changing.

What happens if you act on the myth

If you stop paying because you believe your MPN is void, you get the ordinary consequences of default, and they arrive on a schedule you can set your watch to:

  • Delinquency reported to the credit bureaus at 90 days
  • Default at 270 days for most Direct Loans
  • Administrative wage garnishment of up to 15% of disposable pay
  • Tax refund and federal benefit offset, including a portion of Social Security
  • Collection costs that can add a significant percentage to your balance
  • Loss of eligibility for additional federal aid

No court has accepted the “my MPN is void because of the Treasury transfer” theory. Don’t be the test case! If you’re already behind, there are real ways to stop garnishment that don’t depend on a legal theory nobody has won with.

How To Complete A Master Promissory Note

You complete the MPN at StudentAid.gov after you’ve picked a school and been approved for federal aid, which happens after you file the FAFSA and your school builds your aid package. Your financial aid office will typically email you with instructions once your aid is approved.

You’ll need your FSA ID (the username and password for StudentAid.gov) so if you haven’t set one up, start with our walkthrough on how to create an FSA ID. You’ll also provide personal information including your Social Security number and driver’s license number.

Then you’ll list two references: people you’ve known at least three years, living in the United States at different addresses. The first is usually a parent or guardian. These are the people ED contacts if you default and can’t be reached, so pick people who will actually answer the phone in ten years.

StudentAid.gov estimates the whole process takes about 30 minutes electronically. The form takes a few minutes; the rest is reading — and reading the BRR before you sign is the single highest-return thing you can do here, because it answers most of the questions borrowers panic about five years later. It’s also worth pairing with our guide to everything you can do in your StudentAid.gov account.

What Happens After Signing The MPN?

Once you submit the MPN, ED notifies your school, and the school walks you through entrance counseling before any money is disbursed. It’s a required session explaining what it means to borrow for your education.

Use it. Ask what your total projected debt will be at graduation, what the monthly payment looks like under the Standard plan, and whether the school expects you to borrow again next year. Those three answers do more for your financial future than anything else in orientation — and they’ll tell you fast whether you’re on track with a sane order of operations for paying for college.

Final Thoughts

The MPN is a real contract, and it’s worth reading. But it’s a contract that points to federal law, which means the protections it gives you are the protections Congress wrote, and they change when Congress changes them.

This is why understanding how student loans work before you borrow beats dealing with the fallout afterward.

The practical response is to borrow less, know which of your benefits are statutory versus regulatory, and stay ahead of the plan deadlines as they land. For ideas on keeping the balance down in the first place, check out our guide to saving money in college and our look at what families really pay out of pocket.

Master Promissory Note FAQs

Does the MPN lock in my repayment plan for the life of the loan?

No. The MPN locks in your obligation to repay under the Higher Education Act as it exists over time. Item 1 of the Borrower’s Rights and Responsibilities Statement explicitly warns that amendments to the Act “may modify or remove a benefit that existed at the time that you signed this MPN” — which is exactly what happened to SAVE, PAYE, and ICR when the 2026 rules took effect.

Do I have to sign a new MPN every year?

No. One MPN can cover up to 10 years of disbursements at the same school. You’ll sign a new one if you move from undergraduate to graduate borrowing, if you switch to a school that requires it, or if you’re a parent borrowing for a different child.

Does moving my loans to Treasury make my MPN invalid?

No. The March 2026 interagency agreement explicitly states that referrals are for collection purposes only and do not transfer ownership of the debt. ED remains the legal holder, and your obligation runs to the federal government regardless of which agency or contractor handles the account.

Which loans have actually moved to Treasury so far?

As of mid-2026, only defaulted loans — roughly $179 billion across about 7.8 million borrowers, with collections ramping up over the summer. Non-defaulted loans are part of a later phase with no committed timeline.

Can the government change my interest rate?

Your rate was fixed by statute at disbursement and doesn’t float. Rate changes in the law apply to newly disbursed loans, not retroactively — you can check what applied to each of your loans against the historical federal rate tables.

If SAVE was struck down, could IBR go away too?

They’re not in the same legal position. SAVE was created through the Secretary’s regulatory authority, which is why a court could find it exceeded that authority. IBR is written into statute at 20 U.S.C. § 1098e, so only Congress can eliminate it, and OBBBA preserved it for existing borrowers — a distinction our RAP vs. IBR breakdown walks through in more detail.

I signed my MPN in 2019. Am I stuck with the 2026 rules?

Partly. You keep IBR access and your original loan terms, and you can elect RAP. But if you’re currently in SAVE, PAYE, or ICR, you have to move to IBR or RAP by July 1, 2028 — here’s how to decide between them.

Can I get a copy of my MPN?

Yes. Log into StudentAid.gov and you can view and download every MPN you’ve signed, including the full BRR. You can also request a copy from your servicer at any time, and if you’re not sure who that is, start by finding out who owns your loans.

What happens if I don’t sign the MPN?

No MPN, no federal loan — schools can’t disburse federal loan funds without a signed note on file. If you’re up against a tuition deadline, that usually means falling back on other ways to cover the gap.

Does the MPN cover private student loans?

No. Private lenders use their own promissory notes with their own terms, and those aren’t governed by the Higher Education Act. Private loan terms genuinely are contractual in the way people mistakenly assume federal loans are — which is also why they carry far fewer built-in protections.

Is an endorser the same as a cosigner?

Functionally similar, but the MPN treats them differently. An endorser on a Direct PLUS loan agrees to repay if the borrower doesn’t, and the BRR is explicit that an endorser “is not entitled to all of the same benefits as a Direct PLUS Loan borrower.” Endorsers generally don’t get the borrower’s repayment plan options, which is one more reason to compare Parent PLUS against other financing before signing.

Can Grad PLUS borrowers still sign a new MPN?

Only if they’re grandfathered. Grad PLUS closed to new borrowers on July 1, 2026. Students already borrowing Grad PLUS before that date can generally continue for up to three more years or until they finish, whichever is shorter, as long as they stay in the same program at the same school.

Where do I go if I think my servicer is applying the wrong terms?

Start with your servicer in writing, then escalate to the FSA Ombudsman. ED retained authority over debt validity determinations and dispute adjudication even for loans referred to Treasury, so disputes still route back through the Education Department.

Editor: Clint Proctor

Reviewed by: Chris Muller

The post Master Promissory Notes (MPN): What To Know appeared first on The College Investor.

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The Offer

Direct link to offer

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Our Verdict

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Robinhood Set Records on Revenue, Net Deposits, and Gold Subscribers. The Stock Is Still 44% Below Its High.


Robinhood (HOOD -3.61%) reported second-quarter results on Wednesday that set records nearly everywhere you look. Record revenue. Record net deposits. A record number of Gold subscribers, and record trading volumes in both equities and options.

The stock slipped about 3% during Wednesday’s regular session, closing at $89.84 before the results arrived, then fell another 3.6% on Thursday, to $86.60. That leaves shares roughly 44% beneath the 52-week high of $153.86 they set back in October of last year.

So why won’t the market pay what it used to for a business performing like this? The latest report holds most of the explanation. Here’s a closer look at three things it tells us.

Image source: Getty Images.

The records are broad, not narrow

Robinhood’s revenue reached $1.31 billion in the second quarter, a record, and 32% more than a year earlier. The growth rate more than doubled from the first quarter’s 15%, so the pace is accelerating, too.

Net deposits came in at about $22 billion for the quarter, and total platform assets climbed 32% year over year to $369 billion. Gold subscribers (members of the company’s premium tier, which bundles higher yields, lower margin rates, and other perks) reached a record 4.8 million, up 39%. Funded customers grew 7% to 28.4 million, and retirement assets under custody reached $34.5 billion, 82% higher than a year earlier.

Profitability scaled right along with it. Non-GAAP (adjusted) EBITDA rose 35% year over year to $741 million, a 57% margin.

Net income came in at $573 million, up 48% year over year, and earnings per share climbed at the same rate to $0.62. Both figures got help from about $0.14 per share of one-time gains, though, so the underlying earnings number is closer to $0.48.

The engagement stats were arguably the most impressive part. Equity trading volumes jumped 85% year over year to a record $956 billion, and options contracts traded rose 50% to a record 774 million. On the earnings call, chief financial officer Shiv Verma said the company now counts 13 separate businesses that have each reached $100 million in annualized revenue, two of them added during the quarter.

The mix behind the records changed

Look one layer down, though, and the composition of all that record revenue has shifted meaningfully.

Crypto trading revenue was $252 million as recently as the first quarter of 2025. In this year’s first quarter, it was $134 million. Last quarter, it was $100 million, down 38% year over year — the second quarter in a row of declines at a roughly 40% pace or worse.

What replaced it is younger. Equities revenue nearly doubled year over year to $129 million. Event contracts, the company’s prediction-markets business where customers trade on outcomes like elections and economic data, generated $156 million, up more than tenfold from a year earlier. A business line that barely existed at this scale a year ago now brings in more revenue than crypto does.

This, I’d argue, is what the market is discounting. Robinhood’s transaction revenue has always moved with whatever retail traders are excited about, and the excitement rotates. The records themselves aren’t in dispute. What the market keeps marking down is how repeatable they are, when the fastest-growing line has only recently begun proving itself at scale.

The drawdown hasn’t made the stock cheap

Robinhood Markets Stock Quote

Today’s Change

(-3.61%) $-3.24

Current Price

$86.60

A 44% decline sounds like a bargain. But as of this writing, shares sit at $86.60, or about 38 times earnings — a valuation that assumes plenty of growth ahead. And that’s with earnings flattered by the one-time gains mentioned above.

To be fair, the company is executing well beyond trading. Net interest revenue rose 9% year over year to $389 million, and the margin lending book more than doubled to $21.6 billion. The newer banking and retirement products continue to attract assets, too. Growth like that in platform assets could eventually make trading swings matter less to the overall business.

Is the stock a buy?

Ultimately, I think the market has this one about right. The company is executing about as well as anyone could ask, and the record quarter was broad-based. However, about 38 times earnings already pays for that execution, and the newest revenue lines haven’t yet shown they can hold up across a full market cycle.

If you own the stock, I don’t see anything in this report that argues for selling a business performing like this. I just wouldn’t buy shares on its strength, either. Another quarter or two showing the new revenue mix holding up (crypto stabilizing while event contracts keep growing) could change my mind at a similar price.

The Marketing Channel AI Can’t Commoditize


Catch The Full Episode

Overview

Marketing output is up everywhere, and John Jantsch has good news about where to point it. AI has made it easy for anyone to put out decent marketing content, so the businesses that stand out now are the ones building genuine trust, not churning out more content. Buyers lean on AI engines to help them choose, which puts a premium on being the business people and machines both recommend.

Jantsch explains that the back half of the Marketing Hourglass (retention, repeat business, referrals) is where meaningful advantage lives now. He returns to three ideas from his 2010 book, The Referral Engine, still his bestselling book by the numbers, and shows why they matter more today than when he wrote them. The episode covers why people are wired to refer, how a simple referral system turns that instinct into growth, and why being referable comes down to a value proposition people love passing along.

This one’s for small business owners, agencies, and consultants ready to turn referrals into a growth engine instead of a happy accident. Jantsch walks through partner referrals, an underused channel, using his work with Mike Michalowicz’s Prosper Group as an example, and leaves listeners with two exercises to try this week.

About John Jantsch

John Jantsch is a marketing consultant, speaker, and Wall Street Journal bestselling author known for the Duct Tape Marketing system. He is the author of Duct Tape Marketing, The Referral Engine, and The Ultimate Marketing Engine, and hosts the Duct Tape Marketing Podcast.

Key Takeaways

  • AI has made competent marketing cheap and widely available, making differentiation harder for buyers to spot
  • Buyers increasingly rely on AI search engines and AI models for recommendations rather than doing their own comparison shopping
  • Referrals are the most trusted lead type because they lower perceived risk, making referred customers less price sensitive
  • A referral system requires two components: a process for asking, and a clear, easy to repeat explanation of the value you provide
  • Partner referrals, meaning other businesses that share your ideal client, are a bigger opportunity than most people realize because one strategic partner can refer far more business than a single satisfied customer

Great Moments

  • [00:02] – John opens with the core premise: marketing output is up, results are down, and AI has made his 2010 book more relevant than ever
  • [02:23] – Why getting chosen has become harder, and why doubling down on retention and referrals matters more than chasing new leads
  • [07:08] – The three ideas from The Referral Engine: people are wired to refer, referrals need a system, and referability depends on a clear value proposition
  • [09:28] – Why partner referrals are a bigger opportunity than customer referrals, illustrated through the Mike Michalowicz Prosper Network partnership
  • [12:12] – How AI models are pulling recommendations from customer reviews and social proof rather than traditional authority signals

Memorable Quotes

  • “A referral is the most trusted lead in most cases.” — John Jantsch
  • “No amount of systems or processes or great copy are necessarily going to generate referrals if you are not referable.” — John Jantsch
  • “Machines are talking to machines now to make a referral, if you want to look at it that way.” — John Jantsch
  • “The second half of the hourglass has become probably the most important element.” — John Jantsch

Resources

AI marketing, John Jantsch, Marketing Hourglass, Referral Marketing, Small Business Marketing, The Referral Engine

FCA Shares Update On Stablecoin Sprint


Earlier this year, the UK Financial Conduct Authority (FCA) completed a “Stablecoin Sprint” to better understand the emerging digital currency market. The initiative included about 75 participants, including traditional finance and Fintechs, addressing payments and transfers. This past week, the regulator provided an update on what they learned during the Sprint.

Insights gleaned from the project include:

  • Cross-border and emerging markets are the clearest near-term opportunity. Stablecoins can improve on correspondent banking, especially for corridors involving emerging markets with limited USD access. Advantages are less obvious in major trade corridors already well-served by SWIFT and existing networks.
  • Domestic UK retail payments are already cheap and fast for consumers, so pure programmability is unlikely to drive broad consumer adoption soon. Merchants stand to gain more (lower costs vs card schemes, faster settlement, better liquidity). Possible later or niche consumer use cases include cross-border e-commerce, agentic AI payments, and micropayments.
  • Banks are viewed as essential for trust, scale, and interoperability, but many remain cautious due to AML/CDD concerns and unclear liability across payment chains. There was debate on whether issuers should pay interest or share rewards (potential deposit/credit-creation impacts vs ability to keep end-user costs low).

In regard to regulation, there is an expectation that stablecoins be treated just like money or cash equivalents, but adaptations to rules will be needed to address the new technology. At the same time, over-regulation can stymie innovation.

The FCA and other government entities continue to investigate updates to payment services rules and tokenized assets, including stablecoins.

Laurent Descout, CEO at Neo, shared his thoughts on the stablecoin sprint as these digital assets “continue to attract regulatory attention due to the benefits of fast and low-cost transactions, eliminating the need for ‘clunky bank transfers’ and currency conversions.

“Despite the benefits, corporates have historically been deterred from adopting stablecoins by the operational and regulatory complexity that comes with managing external wallets. To become a core part of operations for businesses in emerging markets, stablecoins need to be able to co-exist alongside traditional currencies, rather functioning as an entirely separate ecosystem that needs to be managed.”



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