Loans
In order to be eligible for any of the loans listed below a
student must be attending at least half-time (full-time for the
Mourer Loan) and be pursuing one of the following degrees: MDIV (all
loans), MA (all loans), MSM (all loans), MTh and PhD (federal loans
only). You will be required to complete the Free Application for
Federal Student Aid (FAFSA) as well as the Luther Seminary Financial
Aid Application. Other forms or documents may be required.
Federal Subsidized/Unsubsidized
Stafford Loans – Stafford Loans come in two varieties.
Subsidized (government pays the interest while you are in school) or
Unsubsidized (you are responsible for all the interest while you are
in school, although you can defer interest payments until after you
graduate). You financial need will determine how much of each type
of loan you are eligible to receive. In order to be considered you
must complete the Free Application for Federal Student Aid (FAFSA)
and the Luther Seminary Financial Aid Application. Both types of
Stafford Loan carry a 6-month grace period. This means that you are
not required to start making payments until six months after you
graduate, leave school or drop to less than half time study.
- If you choose to
defer the interest on your Unsubsidized Stafford Loan while in
school and do not pay it prior to entering repayment, the interest
will be capitalized – or added to the principal. In effect you
will be paying interest on interest. Luther Seminary recommends
that you pay the interest while in school.
Students can borrow $20,500 per year, although only $8,500 of
that is subsidized. However they amount that you may be eligible to
receive may be less depending on your course load and other aid
received. There are also cumulative limits of $65,500 combined
limit for undergraduate and graduate in the Subsidized Stafford
program and $138,500 (less and Subsidized Stafford) for the
Unsubsidized Stafford program. These amounts include any borrowing
graduate for undergraduate prior to attending Luther Seminary.
Stafford Loans disbursed prior to July 1, 2006 have a variable interest rates (based on 91-day
T-bill rate + 1.7% during school with an additional .6% increase
upon graduation) capped at 8.25% or less, depending on yearly
adjustments. All lenders may offer the same rate for the Stafford
Loan, however many now offer some discounts for on-time and
electronic payments. These rates are recalculated each year and
become effective on July 1 of each year.
Starting July 1, 2006 all new Stafford Loans will have a fixed
rate of 6.8%. All previous Stafford Loans will continue as
variable rate loans.
There are two types of fees that may be charged to you in order
to receive a Federal Subsidized or Unsubsidized Stafford Loan.
- Default Fee –
The guaranty agency may charge up to 1% for processing your loan.
- Origination Fee
– The lender may charge up to 1% for processing your loan. Luther
Seminary has a number of lenders on our list of preferred lenders
that do not charge this fee. If you are using a lender that
waives or reduces this fee you should also look to see if they
offer any repayment incentives. These would be reductions in the
interest rate during repayment for making on time payments or
having your payments automatically withdrawn.
Federal GRAD Plus Loans - This
loan is similar to the Federal Unsubsidized Stafford Loan.
Interest starts accruing immediately after disbursement.
Typically a PLUS loan would go into repayment within 60 days of
disbursement, however this version of the PLUS loan will be eligible
for an in-school deferment. So borrowers will only be
responsible for interest while in-school. Borrowers will have
a choice of either paying the interest as they go or letting it
accrue. If you do not pay the interest when the loan goes into
repayment any outstanding interest will be capitalized or added to
the principle. This loan does not have a grace
period. This means that repayment will begin the month
following graduation or leaving school or dropping below half-time.
Being that this is a federal student loan it will be eligible for
consolidation. The interest rate will be 8.5%.
There is also a 3% fee for this loan. However, some
lenders will have repayment incentives that reduce that fee.
This loan differs from the Stafford Loans in that there is a credit
check to qualify. No credit is not bad credit, only an adverse
credit history would bar you from pursuing this loan. You must
file a FAFSA to be eligible and you must use up your Stafford
Subsidized and Unsubsidized eligibility before you can apply.
The amount of this loan is limited to the Cost of Education (as
determined by the Office of Financial Aid) less any other aid
received. There is no cumulative limit for this loan. This loan should
not be confused with the Parent PLUS loan, for the GRAD PLUS you the
student are the borrower. All deferments that apply to
Stafford Loans will also apply for GRAD PLUS.
Federal Perkins Loan – While this is
still a federal student loan, Luther Seminary is the lender. While
this is not technically a subsidized student loan, there still is no
interest charged to the student while they are in school. This is a
fixed rate 5% loan. There are no guaranty or origination fees
charged for this loan. The maximum that you may receive in any
given year would be $6000. However, as in the Stafford program,
this may vary because of other factors. The maximum you may receive
from all schools is $40,000. This loan carries a 9-month grace
period.
Both the Federal Stafford and Perkins Loans have various
provisions for deferment. Deferment means that if you meet certain
conditions you may be able to discontinue your payments for a period
of time. For the Subsidized Stafford and Perkins Loans interest
would also stop. Further both loans have provisions for
cancellation. For a better discussion of deferments and
cancellations please see
www.finaid.org/loans
Mourer Loan - This loan is a
non-federal loan offered by Luther Seminary. It is important to
note the non-federal nature of this loan. What this means is that
once a student has completed their education this loan would not be
eligible to be included with a Federal Consolidation Loan.
Depending on a student’s debt level this might make a difference on
whether they want or should apply for this loan. This is a first
come first served loan. Funds are limited. In order to be
considered you must apply early (Jan-Feb) and check the box on the
Luther Seminary Financial Aid Application requested consideration
for the Mourer Loan.
This is a fixed rate 5% loan with all the same deferment and
cancellation options available to federal loan borrowers. The
difference being that we will cancel up to 50% of the original loan
balance for service in “ministry”. We will cancel 10% of the
original balance per year for the first 5 years of ministry.
Ministry is defined (but not necessarily limited to) as the
following:
- Ordained ministry - is defined as service under call to a
congregation or authorized ministry, subject to oversight by a
recognized denominational body. Such ministries may include parish
ministry, chaplaincy in specialized settings such as health care
chaplaincy and pastoral counseling; campus ministry, spiritual
direction, camps and missionary fields, and in synod, regional,
and church wide offices.
- Lay ministry - is defined as service under call to a
congregation or authorized ministry, subject to oversight by the
congregation and/or a recognized denominational body, or service
under the supervision of a congregation or agency. Such ministries
may include work within a congregational setting or in a
church-sponsored agency including youth ministry, chaplaincy,
diaconal service, social work, advocacy, and related efforts.
- Missionary Ministry - is defined as service under call to a
recognized denominational body or church agency for the purpose of
sharing the Christian faith in international and domestic settings
If you have any questions about whether a certain type of
ministry would be eligible, you should check with the Office of
Financial Aid prior to receiving the loan.
Repayment will begin on the earlier of: (i) the nine month
anniversary of your graduation from the Seminary; or (ii) if you
leave the Seminary for any reason other than graduation, the six
month anniversary of the last day you were enrolled at least half
time.
Interest will not be charged during period of enrollment or
during acceptable deferment periods
If you are experiencing temporary financial hardship and do not
fit one of the allowed deferments you may be able to postpone or
temporarily reduce the amount of your monthly payment by requesting
forbearance. Forbearance is granted at the discretion of the
Seminary. During forbearance, interest will continue to accrue on
the loan at your expense.
Short Term Loan
If you need additional assistance between payments of financial
aid the Short Term Loan is available for amounts up to $1500.
This is a no-fee, no-interest loan that must be repaid prior to
graduating or leaving school. The applications are available
online and in the Office of Financial Aid. Checks are
typically cut each
Wednesday and are available for pick in the Office of Financial Aid
after chapel (10:30 am). Applications completed by noon on
Tuesday will be available the next day. Because of
staffing/scheduling changes this schedule could change without
notice. Please check with the Office of Financial Aid to
verify. Get the Short Term Loan form now.
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