Federal and Private Educational Loans

There are various loans available for students and parents to consider borrowing, if needed, to assist with educational expenses. A loan is money you borrow and must pay back with interest.

Federal Direct Student Loans

The U.S. Department of Education offers low-interest loans to eligible students to help with the cost of college under the Direct Loan Program.

To apply, students must complete the Free Application for Federal Student Aid (FAFSA). You may qualify for:

  • A subsidized loan (based on financial need) - The U.S. Department of Education pays the interest on this loan while you’re in school at least half-time (6 credits), for the first six months after you leave school (referred to as a grace period), and during a period of deferment (a postponement of loan payments).
  • An unsubsidized loan – Loan interest begins accruing/accumulating when the loan is disbursed/sent to the student’s billing account at the College. The student is responsible for paying the interest that will accrue during all periods of enrollment and non-enrollment.
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Requirements to borrow federal direct loans

  • You must have completed the FAFSA;
  • You must complete entrance counseling, a tool to ensure obligations to repay the loan are understood;
  • You must sign a loan contract called a Master Promissory Note (MPN), agreeing to the terms of the loan;
  • You must be making satisfactory academic progress;
  • You must be enrolled for at least 6 credits that count towards their current program of study (major) in the semester for which they wish to borrow loans. Dropping below 6 credits prior to the loan being disbursed will disqualify you from eligibility.
  • You must accept their student loans in Self-Service. A step-by-step guide is available to walk you through the entire process and also provides additional information related to reducing or canceling loans.

Receiving your loan funds

Upon receipt of your FAFSA, the Financial Aid Office will provide you with all of the financial aid to which you're entitled, including loans, if you're eligible and choose to borrow them. This information will be made available to you in the My Awards section of Self-Service. Once all of the above requirements have been met, you will receive a loan disclosure statement via email from the U.S. Department of Education providing you with the total loan amounts you've accepted, the anticipated disbursement amounts, and the dates you are scheduled to receive the loans, per semester.

Generally, the Financial Aid Office will wait until at least 30 days after the start of the semester to disburse/send student loan funding to students' accounts for students who've met the requirements noted above. Loan disbursements take place throughout the semester as students complete loan borrowing requirements.

Note: all single-semester loans are scheduled for two disbursements within the semester; once at the beginning of the semester (as described above) and then again around the 50% point of the semester or program length. This impacts all students who are only borrowing loans for one semester and includes all student loan borrowers enrolled in the Municipal Police Academy Training and the Massage Therapy programs.

Once your loan funds are disbursed to your student account, they will reduce any outstanding charges including, but not limited to: tuition, fees, and any financial-aid-refund-advance-for-books you may have used. If there is a credit of funds on your account after all charges have been paid, the College will process a refund.


To ensure the Financial Aid Office has enough time to certify and disburse your loan funds prior to the end of the semester, these steps must be complete at least *three weeks prior to the last date of the semester:

  1. You must ensure you've accepted the loans you wish to borrow in Self-Service
  2. You must have completed Entrance Counseling**
  3. You must have completed a Master Promissory Note (MPN)**

* Failure to meet this deadline could result in your ineligibility to receive the loan funding.

** You can verify your completion of these requirements on your financial aid homepage in Self-Service.

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Requesting summer loan funding

Most loans are scheduled to disburse for the fall and spring semesters. If you intend to enroll in the summer semester, notify the Financial Aid Office of your interest in borrowing summer loans by completing the 2023-24 Loan Adjustment Form (for summer 2024).

Loan limits

There are annual and aggregate/overall loan amounts that limit the amount of federal direct loans a student may borrow.

Loan proration

Federal regulations require schools to prorate the Federal Direct Subsidized and Unsubsidized Loan amounts for graduating undergraduate students when their final period of enrollment is less than a full academic year. The loan limit proration determines the maximum loan amount that a student may borrow for the final term of study. Graduating undergraduate students who are only attending one semester of the academic year will have their Federal Direct Loans prorated based on the number of credit hours they are enrolled.

Returning loan funds

If you borrowed loan funding you wish to return to your lender after it has already disbursed to your student account, the College can return it on your behalf. This can only be done if it’s been less than 120 days since the date the loan funding was applied to your student account at the College. Complete the 2023-24 Loan Adjustment Form (for loans borrowed during: fall 2023, spring 2024, and/or summer 2024) or the 2024-25 Loan Adjustment Form (for loans borrowed during either: fall 2024, spring 2025, and/or summer 2025) to request your return.

If it has been more than 120 days since the date of your loan disbursement, you will need to return your loan funds directly to your servicer. To access your loan servicer information, view your loan account after logging in with your FSA ID and password.

Exit Counseling

If you borrowed Federal Direct Loans at Montco and have graduated, will be transferring, or have a drop in enrollment to a less-than-half time status (3 credits) you are required to complete exit counseling. Exit counseling provides important information that will guide you as you prepare you to repay your federal student loan(s).

This special edition e-guide from Inceptia is a free resource that addresses the most recent developments in student loan repayment.

Loan Ombudsman

If you need to resolve problems or disputes regarding Direct Loans, Federal Family Education Loans, Guaranteed Student Loans, SLS Loans or Perkins Loans, contact the Federal Student Aid Ombudsman.


Direct Parent Loan for Undergraduate Students (PLUS Loan)

Direct PLUS Loans are federal loans that parents of dependent students can use to help pay for the student's college expenses not covered by other financial aid.

Parents who want to borrow money for their student's education can apply for the Direct PLUS Loan. While you may apply for any loan amount you wish, the Financial Aid Office is required to limit the amount of loan funding you may borrow based on the student's cost of attendance minus other financial aid resources.

If a parent is denied a PLUS Loan, the student may be eligible to borrow up to an additional $4000 in unsubsidized Federal Direct Loan funds. The Financial Aid Office will be notified of the denial and will add the additional unsubsidized loan funding to the student's financial aid package. The student will be required to take action on the additional loan funding (reduce, accept, or decline).

Private/Alternative Educational Loans

Private (or alternative) educational loans can be borrowed by students or parents for educational expenses (current and sometimes previous balances) through banks or lenders. Unlike federal direct student loans which have a fixed interest rate, private educational loans are credit-based and may require a co-signer for approval.

When should private loans be considered?

Before applying for a private loan, it’s recommended all federal & state financial aid options (such as federal direct student loans and possibly the PA State Grant, for eligible students) are exhausted. The first step to apply for federal and state financial aid is to complete the Free Application for Federal Student Aid (FAFSA) each school year.

You should learn about the differences between federal and private student loans before applying for a private loan.

Where can I apply for a private loan?

We have partnered with ELM Select to provide you with a neutral, comprehensive list of private education loan lenders that our students have borrowed from within the past three years. The College does not endorse, recommend, or promote any of the lenders. You are not required to select a lender from this list. You may work with any bank or lender of your choice who will approve a private educational loan to use at Montco for your educational expenses.

Visit ELM Select for information about funding your education and to compare various student and parent private educational loan options.