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Luther's Financing Philosophy

Students are encouraged to borrow only what they need and to seek outside scholarships and save summer earnings in order to reduce overall indebtedness. The Financial Aid Office works closely with students to achieve this goal.

According to the Iowa College Student Aid Commission, the average Luther student graduates with debt similar to or less than the average graduate of any of the state universities in Iowa. We work hard to ensure that our graduates will be able to repay their loans upon graduation--Luther's Stafford Loan default rate of less than two percent is evidence of our success.

There are two ways loans can help cover your college expenses: You can receive need-based federal and institutional loans as a part of your financial aid package and/or you can apply for non-, need-based loans to cover your family's contribution to your education.

Federal Student Loans

Students must complete the Free Application for Federal Student Aid (FAFSA) to be considered for the federal student loan programs. All students receiving a Federal Stafford Loan are required to complete loan entrance counseling on the web to ensure a full understanding of a borrower's rights and responsibilities. The entrance counseling quiz will take 20 to 30 minutes and may be completed at http://www.dl.ed.gov/exitcounseling/ecec-main.asp.

Federal Parent Loan

Parent Loan for Undergraduate Students (PLUS) provide a simple solution for paying educational expenses with the benefits of a federally guaranteed loan. This program allows parents to share the responsibility of financing a college education to help reduce the debt burden of their student. Parents borrow at a fixed rate of 7.9 percent. Because Luther is a Direct Lending school, it is not necessary to apply through a bank to get your loan. Students must complete the FAFSA before a parent may apply for this loan. Parents may request deferment of this loan while the student is enrolled by contacting the Direct Loan Servicing Center.

Institutional Loans

Luther College offers two types of institutional loans--McElroy Loans and Norse Loans. Students must complete the Free Application for Federal Student Aid (FAFSA) and demonstrate financial need to be considered for either of these programs. Both loans offer a five percent fixed rate of interest that is deferred during the in-school period and for a six-month grace period after the borrower ceases to be enrolled at least half-time. Interest accrual begins at the end of the grace period for both loan programs.

Private Loans

Other loan programs are available to allow a student or their parents to finance educational expenses over a longer period of time. These financing programs allow a student to manage this investment in a way that reflects their family's unique circumstances, allowing them to choose from different benefits and terms. Funding is available to finance a student's total share of the cost of education, including travel and personal expenses, if they wish.

The State of Iowa requires all students to exhaust their federal loan eligibility before investigating private student loan options as federal student loans have better terms and conditions. Information regarding the Federal Loan Programs is located directly above this section.

Eligibility for private loans is based on credit-worthiness and ability to repay, not on financial need. Most loans offer deferment of principal payments while the student is enrolled. We recommend that families read Questions to Consider Before Selecting a Private Loan (PDF). The following is a comprehensive alphabetical list of lenders that have made loans to Luther students or parents in the past three academic years and have made an indication to our office that they will continue to make loans to our students. These lenders offer private, non-federally funded, educational loans. Luther College does not endorse the lenders listed below and will permit its students and/or parents to choose any lender that will make a private education loan to the borrower for attendance at Luther College.

Applications for these loans are available online. Applications are normally completed for the full academic year and funds are disbursed equally between semesters. Submit an application early to ensure sufficient time for processing. Applications should be submitted in June or July for fall funds to be available at the beginning of the semester. We encourage students to print a copy of any applications and promissory notes that are completed online so they will have them for later reference.

* - denotes that the borrower must be a credit union member before applying for the loan