Types of Loans

A college education is one of the most important investments in your life.  If you are considering a Federal Direct Stafford Loan to help finance your education or are a parent considering a Federal Direct Parent PLUS Loan, the following information will be of great importance to you.


Because grants and scholarships are limited, many students rely on loans to cover educational expenses.  Students who indicate an interest in loans on the FAFSA are automatically considered for loans.  Although Lackawanna College awards students up to their maximum yearly eligibility, we encourage students to borrow wisely.  Students transferring to a four-year school may run out of eligibility at the four-year school if they borrow too much at Lackawanna.



Federal Direct Stafford
The Federal Direct Stafford Loan is a low interest loan with a fixed interest rate (disbursed between July 1, 2013 and June 30, 2014) of 3.86% subsidized and 3.86% unsubsidized.  This is the first loan option that students should consider.  Repayment begins 6 months after the student ceases to be a half-time student. 

  • Based on financial need as determined by the FAFSA, other aid sources and educational costs.
  • The federal government pays the interest on the loan while the student is enrolled at least half-time in school.


  • Not based on financial need.
  • The student pays the interest while in school or it can be capitalized into the principal thus increasing the amount owed.


Freshman may be eligible to borrow a maximum of $5500, of which no more than $3500 can be subsidized. Students who have earned 24 or more credits may be eligible for a maximum of $6500 per year, of which no more than $4500 can be subsidized. Independent students may be eligible for an additional maximum of $4000 per year in unsubsidized Stafford loan funds.


Federal Direct PLUS Loans

The Federal Direct  PLUS Loan is for parents of dependent students.  This loan is for a credit worthy borrower and the amount is based on educational costs minus any other aid the student is receiving.  Students whose parents are denied the PLUS loan may be eligible to receive an additional $4000 in unsubsidized loans.  Re-payment usually begins 60 days after the final disbursement of the PLUS loan.  A deferment is available while the student is enrolled in school. 


Alternative Loans

Private alternative loans are not part of the federal direct loans programs and should be used as a last resort.  We encourage all students to first consider the Federal Direct Stafford and Federal Direct PLUS loan programs as they offer the lowest fees and interest rates.  However, if those loan programs do not cover your educational expenses, you may want to consider the alternative loan option.  Please feel free to contact us with questions regarding alternative loan options at (570) 961-7859.


Steps to Receive a Federal Direct Stafford Student or PLUS Loan

⊗ Master Promissory Note (MPN)

A Master Promissory Note (MPN) needs to be completed if you wish to borrow through the Federal Direct Stafford or Federal Direct PLUS Loan program.   The Federal Direct Stafford Master Promissory Note (MPN) is a legal document. By signing the Stafford MPN, you promise to repay your current and future Stafford loans. This note is valid for 10 years and does NOT require you to complete another MPN for subsequent borrowing, unless you elect to attend another institution.


Please follow these simple steps to complete the Federal Direct Stafford Master Promissory Note (MPN) online:

  •  Go to www.studentaid.gov
  • Follow the online instructions to get information and to apply.

You will need this information to apply:

  • Your Social Security Number, date of birth, permanent home address, and driver’s license number.
  • The name of the college you plan to attend.
  • The names, addresses, and telephone number of two separate references (Please note the references must NOT be living at the same U.S. address).

Federal Direct Stafford Loans and Federal Direct PLUS Loans are guaranteed by the Department of Education. The loan funds will be delivered directly to your business office student account. The first disbursement will occur approximately 30 days into the semester.



Federal regulations require all Federal Direct Stafford loan borrowers to complete LOAN ENTRANCE COUNSELING before the first disbursement of your Federal Direct Stafford loan.

To complete this requirement, please go online to www.studentaid.gov and click on Entrance Counseling.  The purpose of the counseling is to make you aware of your rights and responsibilities associated with student loan borrowing.



In order to GET your DIPLOMA at Lackawanna College you MUST Complete EXIT COUNSELING

Federal regulations require all Federal Direct Stafford loan borrowers to complete LOAN EXIT COUNSELING before your enrollment ends.  To complete this requirement, please go online to www.studentaid.govand click on Exit Counseling. The purpose of the counseling is to make you aware of your rights and responsibilities as you enter the repayment stage of your student loan borrowing.  Please note that the Exit Counseling requirement must be met before receiving your diploma.

What to Expect

A student loan is a serious obligation and must be repaid regardless of the following:
  • whether you finish school
  • file bankruptcy
  • have a job in your field
  • Change your name, address, telephone number, etc.
  •  Change Schools
  •  Withdraw
  • Transfer
Grace Period: Your federal direct student loan(s) have a 6 month grace period prior to repayment. This grace period begins the day after you graduate, withdraw from school or drop below half time status (6 credits).
Deferment: You have the right to postpone repayment of your loan(s) if you qualify for a deferment. Please contact the Dept. of Education at 1-800-4FED-AID or on-line at www.studentloans.gov for options that may be available to you.
Forbearance:If you are unable to make a scheduled payment due to special circumstances, you may request a forbearance through the Dept. of Education.  You should contact the Dept. of Education immediately if you are experiencing problems with repayment at 1-800-4FED-AID or online @ www.studentloans.gov.

More information -- Deferments

Under certain circumstances you can receive a deferment that allows you to temporarily postpone loan repayments.  A deferment is a period in which repayment of the principal balance is temporarily postponed if you meet certain requirements.  During a deferment, the government pays the interest on subsidized loans.

For all unsubsidized loans and PLUS loans, you are responsible for paying the interest that accrues during the deferment period, or allow it to be capitalized (added to the principal balance).

Deferment Conditions:

·         Enrolled at least half time at an eligible postsecondary school.

·         Study in an approved graduate fellowship program or in an approved rehabilitation training program for the disabled.

·         Unable to find full-time employment (for up to three years).

·         Economic hardship, which includes Peace Corps Service (for up to three years).

·         A member of the National Guard or other reserve component of the U.S. Armed forces who is called or ordered to active duty while enrolled at least half-time at an eligible school or within six months of having been enrolled at least half-time.

·         While borrower is on active duty during a war or other military operation or national emergency and if the borrower was serving on or after Oct. 1, 2007.

Types of Repayment

6 months from your last date of attendance, you will be required to begin making payments on your student loan(s).
The following is a list of some of your payment options:
  • Prepayment-make payments while in school or during your grace period
  • Standard Repayment-Monthly payments remain the same throughout repayment
  • Graduated Repayment-Payment begins with small amounts that increase over time
  • Income Sensitive Repayment-Payments are based on a percentage of your gross monthly income and are adjusted annually.
  • Income Based Repayment-Your monthly payment is capped at an amount that is intended to be affordable based on your income and family size & your qualifications are reviewed annually.  Payments can be as low as zero each month depending on your income.
  • Pay As You Earn Repayment Plan-Your monthly payments are based on your income & family size with adjustments annually depending on income but to qualify you must have a partial financial hardship.  You have a partial financial hardship if the monthly amount you would be required to pay under the 10 year Standard Plan is higher than the monthly amount calculated under the Pay As You Earn Option.
  • Income-Contingent Repayment Plan-Payments are calculated each year and are based on your adjusted gross income, family size, and the total amount of your Direct Loans. Your payments change as your income changes

For more information on repayment options, please contact the Dept. of Education at 1-800-4FED-AID or www.studentloans.gov .
Please use the following information to contact the FSA Student Loan Ombudsman Group. 
Via Telephone: 877-557-2575
Via Fax: 202-275-0549
Via Mail:            U.S. Department of Education
                        FSA Ombudsman Group
                        830 First Street, N.E., Mail Stop 5144
                        Washington, D.C. 20202-5144

Default Prevention Contact

If you have questions about Loan Default or are interested in the various deferment options, please contact:
Danielle Ross
Financial Aid Counselor / Default Prevention Specialist


Loan Websites

Complete entrance counseling, apply for a Federal Direct Stafford Loan or a Federal Direct PLUS loan.  This website also has a section for you to keep track of your student loans and a frequent asked questions section that can help to answer your questions. 
Provides tools and resources for keeping track of your student loan
Access a student loan calculator
Keep track of your loans including the current status at your current and previous institutions
This website is designed to proactively encourage potential student loan borrowers to make smart decisions about their career choice and paying for their higher education.  The key point is to only borrow what is needed and to do as much research as possible to ensure that loan repayment is successful.  This debt tool should sure as a vital tool in making smart borrowing decisions.