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The simplest way is to use the Smudge Tool. This is probably best for photo mats or other small elements...
Create a New Blank File
Use the Shape Tool to draw a rectangle and fill it with any color you'd like
Activate the Smudge Tool, choose a Chalk Brush about 15-20 pixels in size
Drag the Smudge Tool in a zig-zag motion around the edges of the shape to get a torn look
The other way is better for making large background papers look like they are torn
Again, draw a large rectangle on a blank page
Use the Lasso Tool...The regular Lasso, not the Magnetic Lasso, to draw a jagged oval around the edge of the shape
Hit Delete to clear that portion of the shape, but don't deselect the image yet
Now, move the lasso shape inward and down. Don't deselect yet!
Choose Filter---->Noise----->Add Noise
Check Monochromatic if there are to many colors in the noise area...adjust the percentage of noise and choose either Uniform or Gaussian depending on your preference. Don't deselect yet!!
Choose Filter---->Blur---->Motion Blur and again make whatever adjustments to get the look you prefer
Now you can deselect the image. If you'd like, you can use the Smudge Tool to go over both edges.