Federal Direct Stafford Loan

Luther College offers Federal Stafford Loans through the William D. Ford Direct Student Loan Program. This means that our students borrow their Stafford Loans directly from the Federal government.

There are two types of Stafford Loans offered to our students: subsidized and unsubsidized. The points below outline the program and differentiate between the two loan types.

  • Eligibility is outlined on the financial aid award
  • Borrowed in student's name
  • No co-signer required
  • Completion of Entrance Counseling and a Master Promissory Note is required before disbursement of the first loan
  • Students may borrow up to a maximum combined Subsidized and Unsubsidized Stafford Loan of $5,500 for the freshman year, $6,500 for the sophomore year and up to $7,500 for each of the junior and senior years
  • Low net origination fee of 1.068% as of October 1, 2015
  • Subsidized and Unsubsidized Stafford Loans borrowed between July 1, 2016 and June 30, 2017 will have a fixed 3.76% interest rate
  • Subsidized and Unsubsidized Stafford Loans borrowed between July 1, 2015 and June 30, 2016 will have a fixed 4.29% interest rate
  • Subsidized and Unsubsidized Stafford Loans borrowed between July 1, 2014 and June 30, 2015 have a fixed 4.66% interest rate
  • Subsidized and Unsubsidized Stafford loans borrowed between July 1, 2013 and June 30, 2014 have a fixed 3.86% interest rate
  • Loan Servicing is handled by a U.S. Department of Education contractor.  Loans are serviced by a contractor once they have been disbursed to the student's account
  • Repayment begins 6 months after the student graduates or drops below half-time status
  • Possible repayment/cancellation benefits for full-time employees in certain fields


  • Based on financial need as determined by the FAFSA
  • Federal government subsidizes (pays) the interest on the loan while the student is enrolled at least half-time


  • Not based on financial need
  • Interest will be charged while the student is enrolled and until the loan is paid in full
  • Students have the option to pay the interest as billed quarterly throughout their schooling, or to allow the interest to be added to the principal at repayment
  • Students need to contact their Direct Loan Servicer if they want to receive interest bills while in school. Information regarding the Servicer will be sent to the student once a loan has been disbursed