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You are here:  Financial > Loans > Types of Loans

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.  The PLUS Loan interest rate is fixed at 6.41%.  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:

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 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.studentloans.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.