Educational Loans

A loan is a form of financial aid that must be repaid, with interest. Few students can afford to pay for college without some form of education financing. Many students find that they must supplement their savings, earnings, or family resources with educational loans which usually do not require repayment until after completing school or dropping below half time enrollment. Before  borrowing, the lender will be present you with a sample repayment schedule and terms of your loan, which will include the necessity for repaying the loan and consequences for failing to do so.  Additionally, as a student loan borrower, any time your loan amount is modified, you will receive a notice in Banner Self Service that updates your loan’s monthly repayment amount and your total cost of borrowing based on the loan change.

Loan Types

1: Federal Subsidized & Unsubsidized Direct Loans

The Federal Direct Loan is a long term loan with a fixed interest rate.  The interest on the need-based, subsidized loan does not accrue while the student is enrolled at least half time or in the grace period.   The unsubsidized loan is not based on financial need and interest accrual begins upon loan disbursement. Loan funds are borrowed directly from the federal government through the U.S. Department of Education.

The William D. Ford Federal Direct Loan are funded by the federal government through the U.S. Department of Education and is a long term loan with a fixed interest rate. The interest rate on these loans for undergraduate students for the 2022-23 year is 4.99% or 6.54% for graduate students.

Loan repayment begins six months after you complete the program, or drop below half-time, which at Pacific Lutheran University, is six credits for undergraduates, four for graduate students. If you are borrowing the Federal Direct Loan for the first time, you are required to complete the Master Promissory Note (MPN), an entrance interview, and each year.  The Annual Student Loan Acknowledgment is also recommended prior to receiving your loan  proceeds each year, as it updates your total Direct Loan borrowing, changes to your anticipated monthly payment amount, and total loan payoff as each loan is added to your total borrowing.

Loan proceeds are disbursed at the beginning of each semester and the loan is evenly divided over the loan period (number of semesters you will be enrolled at least half time) during the academic year. Loan proceeds are posted to your university student account and are applied against university charges for the semester.

If your loan amount, when disbursed, exceeds your current university charges and creates a credit balance on your account, you may request the balance to be issued to you by completing a the online Refund Request form, which requires your epass login.   Refunds are generated weekly and are available on Fridays, by automatic deposit if your on-campus paycheck is delivered by automatic deposit into your bank account, or by paper check at the Business Office.

After you have accepted your Federal Direct Loan on your financial aid offer, the Office of Student Financial Services will create your loan record with the U.S. Department of Education. After you have accepted your loan, first time borrowers must complete an on-line  loan promissory note and a Direct Loan entrance counseling session at the Federal Student Aid website.

Depending on the financial need of the student, Direct Loans can be subsidized (interest paid by the Federal Government) or unsubsidized. 

Subsidized:
This loan is awarded on the basis of financial need. The student will not be charged any interest before they begin repayment or during authorized periods of deferment. The federal government “subsidizes” the interest during these periods. Interest on loans disbursed on or after July 1, 2022 is 4.99% for undergraduate students. Graduate students are not eligible for a subsidized loan.

Unsubsidized:
This loan is not awarded on the basis of need. The student will be charged interest from the time the loan is disbursed until it’s paid in full. If the student allows the interest to accumulate while in school or during other periods of nonpayment, it will be capitalized, that is, added to the principal amount of your loan, and additional interest will be based on that higher amount. Interest on the unsubsidized loan disbursed on or after July 1, 2022 is 4.99% for undergraduate students, 6.54% for graduate students.

These Federal Direct Loans first disbursed on or after October 1, 2020, but before October 1, 2021 have an origination fee of 1.057%. This fee amount is deducted from the loan proceeds before it is released to the school for disbursement onto the student’s account. Loans disbursed on or after October 1, 2021 will have a new origination fee, reset each year by the U.S. Department of Education during the summer. Loan fees will remain unchanged after October 1, 2021  according to the U.S. Department of Education.

In most circumstances if you are a U.S. Citizen or in the United States on a Permanent Visa status, have been admitted to the university and enrolling at least half-time, you will be eligible for Direct Loans.

To apply for a Direct loan you must first submit a FAFSA form (remember to include PLU’s school code 003785). Upon receiving your FAFSA information from the federal government, PLU will compile an aid award offer. If you are awarded a Direct loan, you will need to complete the Annual Student Loan Acknowledgment at the Federal Student Aid website. First time borrowers must also complete the Master Promissory Note as well as the Direct Loan Entrance Interview.

The amount that you can borrow depends on your class standing, dependency status, and whether you are an undergraduate or graduate student. The following annual limits are effective July 1, 2008.

Dependent Undergraduate Student:

  • $5,500 – First year student (0-29 earned credits hours), with up to $3,500 subsidized by the federal government
  • $9,500 – First year student (0 – 29 earned credit hours) whose parent has been denied the Federal Parent Loan, with up to $3,500 subsidized by the federal government
  • $6,500 – Second year student (30-59 earned credit hours), with up to $4,500 subsidized by the federal government
  • $10,500 – Second year student (30-59 earned credit hours) whose parent has been denied the Federal Parent Loan, with up to $4,500 subsidized by the federal government
  • $7,500 – Third and Fourth year students (at least 60 earned credit hours), with up to $5,500 subsidized by the federal government.
  • $12,500 – Third and Fourth year students (at least 60 earned credit hours) whose parent has been denied the Federal Parent Loan, with up to $5,500 subsidized by the federal government

Independent Undergraduate Student:

  • $9,500 – First year student (0-29 earned credit hours), with up to $3,500 subsidized by the federal government.
  • $10,500 – Second year student (30-59 earned credit hours), with up to $4,500 subsidized by the federal government
  • $12,500 – Third and Fourth year students (at least 60 earned credit hours), and post-BA students in Teacher Certification program, with up to $5,500 subsidized by the federal government

Graduate students:

  • $20,500 – Each academic year. The entire loan amount borrowed is unsubsidized.

3: Federal Parent PLUS Loans (Loans to Parents)

A Federal Loan that parents borrow on behalf of their dependent student. Unlike the Direct loans, the loan repayment responsibility belongs to the parents. The PLUS loan helps parents pay for their child’s education over an extended period of time with a fixed rate interest loan.  Eligibility for the Parent PLUS loan requires a credit worthy parent or endorser and funds are borrowed directly from the federal government through the U.S. Department of Education.

The Federal Direct Parent PLUS loan is taken out by the parent for their dependent child (determined by the FAFSA) to help pay for their education over an extended period of time. The Federal Direct Parent PLUS Loan is funded directly by the federal government under the William D Ford Federal Direct Loan Program. Interest rate on Federal Direct Parent PLUS Loans disbursed on or after July 1, 2022 is a fixed 7.54%. There are no annual borrowing limits set by the federal government, but eligibility is limited to the student’s cost of attendance minus any financial aid received during the loan period, with application being made for each academic year the parents wish to borrow. To find out your maximum eligibility for the PLUS Loan, please call the Office of Student Financial Services  at 253-535-7161.

As a parent borrower, you must be:

  • A student’s natural or adoptive mother or father
  • An eligible step-parent, if income and assets are considered in the Expected Family Contribution (EFC)
  • Borrowing on behalf of a dependent undergraduate student
  • Either a U.S. citizen, U.S. national or eligible non citizen
  • Not in default on any education loan or owing a refund on any education grant
  • Not on record with an adverse credit history as defined by the Department of Education

Your dependent student must be:

  • A U.S. citizen, U.S. national or eligible non citizen
  • Enrolled or accepted for enrollment at least half-time in a degree or certificate program at an eligible school
  • Not in default on any student loan or owe a refund to any education grant program

The Federal Direct PLUS Loans disbursed on or after October 1, 2020, but before October 1, 2021 will have an origination fee of 4.228%. This fee amount is deducted from the loan proceeds before it is released to the school to be disbursed onto the student’s account. Loans disbursed after Oct 1, 2021 will have an updated origination fee, reset every year by the U.S. Department of Education each summer.  Loan fees will be unchanged after October 1, 2021 according to the U.S. Department of Education.

Parents wishing to borrow a Federal Direct Parent PLUS loan should apply directly with the U.S. Department of Education. Once your credit history is found to be acceptable and you complete the Master Promissory Note (MPN), the U.S. Department of Education will notify PLU of your approval. PLU will then change your Federal Direct Parent PLUS loan status on Banner to “cert” (certified), modify your loan amount to your requested loan amount or your maximum eligibility, whichever is less, and disburse the loan proceeds onto the student’s account when they are received from the federal government.

PLEASE NOTE: Because this is a credit based loan, a credit check is made at the time of your application. To avoid multiple credits inquiries on your credit record, do not apply before March 1.

The amount that you can borrow is equal to your cost of attendance minus any other financial aid you receive. For example, if your cost of attendance is $35,000 and you receive $28,000 in other financial aid, your parents could borrow up to—but no more than—$7,000.

4: Federal Grad PLUS Loans (For graduate students only)

A Federal loan that allows credit-worthy graduate students to borrow the cost of their education not covered by other forms of financial aid. Repayment on this loan is deferred while the student is enrolled at least half time and has a fixed interest rate of 7.54% for loans disbursed between July 1, 2022 and June 30, 2023. Funds are borrowed directly from the federal government through the U.S. Department of Education.

The Federal Direct Graduate PLUS loan is borrowed by graduate students to fund the cost of their education not covered by other forms of financial assistance. The Federal Direct Grad PLUS Loan is funded directly by the federal government under the William D. Ford Federal Direct Loan Program.

Interest rate on Federal Direct Grad PLUS Loans disbursed on or after July 1, 2022 is a fixed 7.54%. There are no annual borrowing limits set by the federal government, but eligibility is limited to the cost of attendance minus other financial aid received during the loan period. Repayment begins six months after graduation or when student’s enrollment falls below half time.

The Federal Direct PLUS Loans first disbursed on or after October 1, 2020, but before October 1, 2021 will have an updated origination fee of 4.228%. This fee amount is deducted from the loan proceeds before it is released to the school for disbursement onto the student’s account.

  • Either a US citizen, U.S. national or eligible non-resident
  • Enrolled or accepted for enrollment at least half time in a PLU graduate program
  • Not in default on any student loan or owe a repayment on a federal grant.
  • Completed the Free Application for Federal Student Aid (FAFSA) for the applicable aid year and have the results sent to PLU
  • First time borrowers for the Federal Direct Grad PLUS must complete an Entrance Interview, which can be completed online at Federal Student Aid website.
  • Not on record with an adverse credit history as defined by the Department of Education.

Upon acceptance into a PLU graduate program and submitting the Free Application for Federal Student Aid (FAFSA), the PLU Office of Student Financial Services will send you an offer of financial aid. If your other forms of financial assistance do not cover the entire cost of education (based on a standard cost of attendance we use), the Graduate PLUS loan will be automatically awarded to fill that gap. Loans are awarded on an annual basis and you must re-submit the FAFSA each year to continue receiving the loan.

After you have accepted your Direct Grad PLUS Loan on your financial aid award letter, the financial aid office will create your loan record with the U.S. Department of Education.  Once you complete the master promissory note and Entrance interview on the U.S. Department of Education website, your loan proceeds will be posted onto your student account.  If your loan amount exceeds your university charges and creates a credit balance on your account, you may request the balance to be issued to you in the form of a check by completing a Refund Request Form at the Office of Student Financial Services. Refund checks are produced weekly and are available every Friday at the Business Office.

5: Alternative Loans

Also known as private loans, help bridge the gap between the actual cost of your education and the limited amount the government allows you to borrow in its programs. Private loans are offered by private lenders and there are no federal forms to complete.

Private (or alternative) education loans are credit based loans made through commercial banks and credit unions. Before borrowing a private education loan, it is important that you consider:

  1. Discussing your financial aid options with the Office of Student Financial Services. We will help determine if there are options other than borrowing available to you and be sure that if borrowing is unavoidable, that you maximize your federal student loans options first.
  2. Researching all applicable loan fees associated with borrowing a private loan. Because these are commercial loans, there will be either up front fees, or fees added when loans are disbursed or when they enter repayment.
  3. Understanding how your interest rate is calculated, when it begins to accrue, how often it is adjusted, whether there is an interest rate cap, how often the accrued interest is added to your loan principal, and how accruing interest will increase the total cost of borrowing.
  4. Understanding the terms and conditions of your loan, the repayment timelines, and your repayment deferment options, if any.
  5. Knowing the difference in your loan terms and costs if you use a co-signer. Most lenders offer better loan terms on loans secured with a co-signer.
  6. Understanding that private education loans are considered an outside resource like outside scholarships. These loans must be considered as part of your financial aid package. The sum of your private loans (in combination with other financial aid awards) cannot exceed your total cost of attendance for the year.

Your private loan maximum is the difference between your current financial aid award and your cost of attendance, as determined by the PLU Office of Student Financial Services. When applying for a private loan, you will be borrowing loan funds for one academic year at a time.

After you have determined that you will need to borrow an additional private loan, go to the application website of your selected lender and complete their online application. Your lender will collect the necessary application documents from you to make their loan decision. Once your application has been approved, your lender will notify the PLU Office of Student Financial Services. Please note that if you apply with a co-signer who possess a better credit record than yourself, you could improve the likelihood of loan approval and the terms (and cost) of your loan.

Pacific Lutheran University does NOT recommend specific private education loan providers, nor does the university have agreements with ANY lenders.  You are free to borrow a private education loan from ANY lender. All private lenders complying with federal regulations must provide to you Federal Truth-in-Lending Disclosure Statements (which outlines your cost of borrowing their loan) when you apply, are approved and prior to the loan disbursement. They will also provide you with a Private Education Loan Applicant Self-Certification Form, which you must sign and return to them before they can process your loan.

Generally, your current education loan provider is a good place to start looking for a private loan lender, or a lender with whom you already have an account relationship.  The following link to FastChoice provides you with a tool to research and compare private loans from lenders who have made loans to PLU students in the last five years.  Remember that your actual loan terms may be different and you are encouraged to read all of the disclosure information before borrowing.

Code of Conduct

Pacific Lutheran University administers its loan programs in accordance with the following code of conduct (click here):

  • There is no revenue sharing arrangement with any lender,
  • No gifts of more than nominal value (as defined in regulation) are accepted from lenders, guarantors, and loan servicers,
  • No compensation is accepted for any consulting services offered to lenders,
  • No lenders are assigned to first-time borrowers,
  • We will certify any student loan application from any participating lender,
  • We do not participate in any “opportunity pool” with any lender,
  • No lender may assume any function performed by the financial aid office staff,
  • No compensation is accepted to participate on any (lender, guarantor, or loan servicer) advisory board, except for reasonable expenses incurred (as defined in regulation) as a result of that service.

6: Federal Nursing Loans

If you’re a student enrolled in the school of nursing, then you may be eligible for a Federal Nursing Loan.

Students accepted for admission into the PLU School of Nursing and enrolled at least half-time in the nursing program may be considered for a low interest, federally funded Nursing Loan. Federal Nursing Loans have a fixed interest rate of 5% and a repayment grace period of nine months after graduation (or less than half time enrollment, whichever comes first). Nursing Loans at PLU are funded by loans repaid by PLU students. You must repay this loan to PLU.

The Federal Nursing Loan is awarded based upon financial need. The financial need of a student is determined by the FAFSA.

To apply for a Nursing Loan you must first submit a FAFSA form (remember to include PLU’s school code 003785). Upon receiving your FAFSA information from the federal government, PLU will compile a financial aid award. If you are awarded a Nursing Loan, additional on-line paper work will be required.  To receive Federal Nursing Loan funds, borrower must accept the loan on Banner Web.   Prior to the start of the academic year, borrowers will be notified via email when their on-line processes are ready to be completed and provided the link to access their loan account.

The amount of this loan is based on financial need. The loan limits per academic year are:

  • Sophomore: $3,300
  • Junior: $5,200
  • Senior: $5,200
  • Graduate: $5,200