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.