Federal Direct Stafford Loan

Loan Program Highlights

• 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 1.057%
• Subsidized and Unsubsidized Stafford Loans borrowed between July 1, 2026 and June 30, 2027 will have a fixed 6.52% 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

Schedule of Reductions (SOR)

The One Big Beautiful Bill introduces a new requirement that adjusts federal student loan amounts for student borrowers who are not enrolled full time. While we are still receiving updated guidance from the Department of Education, the following is correct based on our current understanding of the rule. This page will be updated as guidance evolves.

To receive 100% of your federal loan, you must remain enrolled in 12 credits throughout the semester. If your enrollment drops below 12 credits, your loan amount will be reduced to match the percentage of full‑time enrollment at that moment. Because enrollment can change during the term, loan eligibility will be continuously monitored and updated as needed.

At Luther, federal loans are disbursed in two equal installments:

• 50% in the Fall Semester
• 50% in the Spring Semester

Course Changes & Advising

After the Add/Drop date, students dropping a course that would put them below full-time status (12 cr) are required to contact the Provost’s Office, to ensure they understand how the change may affect financial aid and their graduation timeline.

• For questions about your course load, contact the Provost (provost@luther.edu).
• For questions about how enrollment affects your federal loans, reach out to the Financial Aid Office (finaid@luther.edu).

Loan Eligibility Examples

• 12 credits: 12 registered / 12 required = 100% loan eligibility
• 8 credits: 8 registered / 12 required = 67% loan eligibility

Important Notes

• J‑Term credits count toward Fall enrollment, but they are only added after J‑Term courses begin. Loan amounts may be adjusted at that time.
• Students who take extra credits in the Spring can regain loan eligibility lost during the Fall, as long as they complete an average of 24 credits for the academic year (full‑time status).

Subsidized Loan Highlights

• 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

Unsubsidized Loan Highlights

• 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