William D. Ford 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 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 0.05%
- Subsidized loans borrowed after July 2008 have a fixed 6.0% interest rate
- Unsubsidized loans borrowed after July 2006 and Subsidized loans borrowed between July 2006 and July 2008 have a fixed 6.8% interest rate
- Loans borrowed prior to July 2006 have a variable interest rate with cap of 8.25%. The interest rate is set annually on July 1st.
- Repayment begins 6 months after the student graduates or drops below half-time status
- Possible cancellation benefits for full-time employees in certain fields
Subsidized
- Based on financial need as determined by the FAFSA
- Federal government subsidizes (pays) the interest on the loan while the student is enrolled and until repayment begins 6 months after graduation or a drop to below half-time status
Unsubsidized
- Not based on financial need
- Interest will be charged while the student is enrolled and until repayment of principal begins 6 months after graduation or a drop to below half-time status
- 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