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Federal Direct Loans

Additional Information For Entrance Counseling: Time Limitation on Subsidized Loan Eligibility for First Time Borrowers. 

Direct Subsidized Loan Limit Per Cent Announcement

Effective on or after December 1, 2013, the required origination fee will increase from 1.051 percent to 1.072 percent for both Direct Subsidized and Direct Unsubsidized loans.  The required origination fee increase for Direct PLUS Loans is 4.288 percent.  These changes only affect loan borrowers whose first loan disbursement occurs after December 1, 2013. 



First-time borrowers at Montgomery College must complete  Direct Loan Entrance Counseling before submitting a Loan Processing Form. In addition, you may be required to attend a loan information session. At this time, you may complete the  electronic loan entrance counseling session and the Master Promissory Note .

LOAN DECLINE FORM (PDF 60.1 KB)

If you have been approved to borrow a Federal Direct Loan and you wish to cancel the loan, you may complete the LOAN DECLINE FORM. Officially canceling the loan is not a requirement. (In order to process any loan at Montgomery College, the loan application form must be signed by the student. Without the completed loan form and student eligibility the loan will not be posted to the student account.)

The Subsidized Federal Stafford Loan
  • Loans are available to students with financial need not covered by grants and scholarships.
  • Students may apply for loans only after they have been reviewed for grant eligibility.
  • For 2013-2014 academic year, the undergraduate subsidized and unsubsidized Direct Loans will have a 3.86% fixed interest rate (capped at 8.25% ). The interest rate changes July 1 annually.
  • Accumulated interest while you are in school or while your loan is in deferment is paid by the Federal Government.
  • Interest payments begin on this loan when you enter repayment six (6) months after you graduate or drop below half time enrollment.

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The Unsubsidized Stafford Loan

  • Interest rate for 2013-2014 is fixed at a 3.86%.
  • Loans prior to July 1, 2006, have a variable interest rate.
  • You may pay the accumulated interest on unsubsidized loans or it will capitalize.
  • Interest may be paid while your loan is in deferment or once you begin repayment.

 

Annual Borrowing Limits For Dependent Students
Effective since 7/01/09

Grade Level *Subsidized (Sub) Maximum **Unsubsidized (Unsub) Maximum Combined Sub & Unsub Maximum
Freshman $3,500 $2,000 $5,500
Sophomore $4,500 $2,000 $6,500

*The Subsidized Stafford Loan for 2012-2013 is fixed at a 3.86% interest rate for new borrowers.
**The Unsubsidized Stafford Loan for 2012-2013 is fixed at a 3.86% interest rate for new borrowers.

 

Annual Borrowing Limits For Independent Students
Effective since 7/01/09

Grade Level *Subsidized (Sub) Maximum **Unsubsidized (Unsub) Maximum Combined Sub & Unsub Maximum
Freshman $3,500 $6,000 $9,500
Sophomore $4,500 $6,000 $10,500

*The Subsidized Stafford Loan for 20132014 is fixed at a 3.86 % interest rate for new borrowers.
**The Unsubsidized Stafford Loan for 2012-2013 is fixed at a 3.86 % interest rate for new borrowers.

 

Aggregate (Lifetime) Borrowing Limits
Effective since 7/01/09

Student Type *Subsidized (Sub) Maximum Combined Sub & Unsub Maximum
Dependent Undergraduates $23,000 $31,000
Independent Undergraduates $23,000 $57,500

*The Subsidized Stafford Loan for 2013-2014 is fixed at a 3.86% interest rate for new borrowers.


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Parent Plus Loans

Federal Parent Loan for Undergraduate Student (PLUS Loans)

 

2013-2014:

To apply for a  PLUS loan, a Free Application for Federal Student Aid (FAFSA) must be on file. This loan is available to parents of dependent students to borrow on behalf of their child. For the academic year (fall/spring or spring only)  a Plus Loan Request Form is required by Montgomery College. Forms are available online any MC campus financial aid office beginning in July of each academic year. The interest rate for PLUS loans is fixed at 6.41 % (capped at 10.5%). The interest rate changes July 1 annually. Loans prior to this date are at a variable interest rate.

This loan is based on credit-worthiness and the parent starts repayment 60 days after the full disbursement of the loan. The parent may borrow up to the student's cost of education, excluding awarded financial aid.

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Perkins Loans

A Federal Perkins Loan is a low-interest (5%) loan for students with exceptional financial need. The loans are made by Montgomery College with funds that are distributed by the Federal government. You must demonstrate financial need and be registered for at least half-time enrollment to receive this loan.

You will not be charged a fee to borrow this loan, and you do not have to pay it back until nine months after you graduate or drop below half-time enrollment.

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Private Loans

Private Loans are based on the borrower's credit history; some lenders require a cosigner. Students/Parents may borrow up to the student's yearly Cost of Attendance minus any other financial aid the student is receiving, including other student and parent loans.

A private loan usually costs more than the federal loans, and the expenses you pay may vary widely between different lender’s programs. Do not forget to log in to your MYMC portal to get your cost of attendance and other necessary information to complete the self-certification form to submit to your private loan lender. 

Is a Private Loan a wise decision for you? Think carefully before going deeply into debt. There may be other opportunities for you. You can discuss these options and your specific situation with one of our financial aid representatives. There is also a discussion available at Finaid.org 

For education loans, you almost always receive better loan conditions and lower rates with a Federal Perkins, Subsidized Stafford, Unsubsidized Stafford, or PLUS loan. Before proceeding with a private loan, check your eligibility for these options first.

When do families consider a private Loan?

  • If you or your parents do not meet Federal Eligibility Requirements
  • If you have received all the aid you are eligible for, including Federal loans, and still have additional cost
  • If you have outstanding charges and it is too late to obtain Federal aid for a previous period of enrollment

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Repayment

Loan funds are generally repaid after attending college. Interest rates for educational loans may be lower than commercial interest rates. There are special loans for parents and independent students who are not eligible for grants.

When you accept the money from the loan, you are agreeing to repay the loan. If you fail to repay the loan under the terms of the promissory note, you will have defaulted on your loan. Defaulting on your student loan could damage your credit rating for a very long time.

The Federal Government works with student loan borrowers to informally resolve loan disputes and problems with federal loans. For more information regarding the options visit the federal web site for disputes .

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MC TIP (MC Tuition Installment Plan)

Before applying for an alternative loan, you might also want to investigate MC Tuition Installment Plan (MC TIP). You can view and enroll for MC TIP from inside MC Bill Payment by logging into MyMC and going to Pay My Balance/View My Bill.


INSTRUCTIONS FOR LOAN EXIT COUNSELING

Students who borrowed a Federal Stafford Loan, or a Federal Direct Stafford Loan  or a Teach Grant and have transferred, or dropped below 6 college credits must complete Loan Exit Counseling.  We have information on how to complete the exit counseling process and a form that must be submitted to MC. Please click the link to the US Department of Education Student Loans web site to complete this requirement. Remember to complete and return the Loan Exit Reference Document in the link above.

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