<p>My child's aid pkg. for the school she will be attending has only subsidized loans; however, the pkg. says she can request the $2000 in unsubsidized loans if she needs to. Any outside scholarships she receives come off of loans, work-study, and then her grant. Right now her total loans offerd are under $5000, which I see as a good thing, but I'm thinking of having her take the extra loan. Here's my reasoning---freshman year is the year when she will have the largest $$$ amount of one time outside scholarships. We know she will get several by virtue of her class rank, and she already has received a few thousand from other sources, which although they will be paid directly to us, we are obligated to report to the school. As I see it, she has a good chance of covering all the loans she is expected to take. Even if she for some reason does not get enough to cover all the loans , she has at least enough to cover the extra $2000. If for some reason they take the scholarships off the subsidized loans first, I would gladly pay the interest on the unsub. for her while she is in school. Am I missing something here? Is there a flaw in my plan that I'm not seeing?</p>
<p>If the scholarships do not come through and the extra money is needed, then accept the unsub loans. They will still be out there.</p>
<p>I think what has happened here is that the OP has received a financial aid package that does not include the subsidzed Staffords from a school that has a policy that outside scholarships will reduce the need package starting with loans, workstudy and then grants. What the OP wants to know is if she takes the unsubsidized loans that have not been listed as part of her financial aid award, if the college will replace them with the outside awards so that the $2K in unsub Staffords provides that much of a buffer from erosion of the financial package by the outside scholarships.</p>
<p>I don’t know the answer. You have to ask the financial aid office for a definitive answer. My inclination is that it would NOT work that way, because the way I see it is that the the Unsub is not part of your financial aid package. If you can do what you are proposing, every and anyone can just take out loans to meet family contribution and then have the outside awards replace them, rather than touch the college’s financial aid awards. The only time it would make sense to permit this is if the college did not meet 100% of your need as they define it, and then would allow you to replace loans you take up to your need amount. In such cases, the schools I know would not take the outside scholarship off anything until it started going beyond your need figure. </p>
<p>The minute you get awards that are more than your family EFC, the part of your financial aid that comes from government subsidized loans, is converted to unsubsidized loans. That isn’t something that the college has any say about. It’s all part of FAFSA. So if your EFC is $20K and you have $20K in a financial aid package including $3500 in subsidized Stafford loans, the minute you get outside aid of any amount, it has to come off of the subsidy. As long as the school’s official COA is not reached, you can still have the $3500 loan to meet your EFC just like anybody else, but you no longer qualify for that loan to be subsidized. So, if you get a $3500 outside scholarship, the Stafford becomes a regular loan just like anyone without financial need can get. So taking the additional $2000 unsub Stafford, is’t going to help you. It’s not the loan you would lose, because anyone can take that loan that is FAFSA cleared and whose COA does not get exceeded. It’s the subsidy that is the aid/</p>
<p>That’s why when I compare packages, I never include loans. They are not aid. They just let you delay your payment, but if they are subsidized, that subsidy is the aid.</p>
<p>Now that part is federal, so it does work that way. How your D’s college will work the rest of it out if they also have some college loans in there, I don’t know. I can say what makes sense, but things don’t always make sense, so anything specific has to be run by the financial aid department specifically. Can’t assume a thing.</p>
<p>But usually an aid package is put together to meet need and the instant any need is decreased by outside awards, that package as presented is what is decreased. Otherwise, you can take out a huge PLUS loan and have that decreased by a huge scholarship and protect your entire package and make money off the deal. No can do, most of the time.</p>
<p>It used to be that one could make money off of scholarships and financial aid because double dipping was allowed. I got twice the amount of scholarship and financial aid monies than what I needed when I went to college my freshman year, and I just kept the excess. These days, the private awards would have to be reported to the college and I would only get what the greater of my need amount as calculated by the college or the amount of outside awards. No double dipping allowed. The Stafford loans on an unsubsidized basis could be kept if the COA is not exceeded since anyone can get that.</p>
<p>I think I understood most of the above post, except for the third paragraph. I will be taking a PLUS loan, but according to what is written on her FA pkg., outside scholarships come off of her loans, then her work study, then her grant. I don’t expect that the amount of her outside scholarships will exceed the amount of her loans, work study, and grant. It’s a decent sized grant, and she also has a huge college scholarship in addition to all this. (We got a great pkg. for her #1 choice school—and I do realize how lucky we are, especially after seeing the other pkgs. she got.) At best, outside scholarships may cover her loan and work study amount. Am I understanding correctly that you believe her subsidized loans will convert to unsub? I thought the college just plans to replace them with any outside scholarships. And you are correct in your assumption that I am hoping she does not lose any of her grant money, which is why I thought I might have her take out the extra loan. However, it seems to be that because that loan is NOT part of her pkg., they would not replace that particular loan with any scholarships. I would be ok with that. I’m still a tad confused, but I’m glad I asked the question—both posters brought up points I hadn’t thought about. Thanks.</p>
<p>In the third paragraph, I am addressing the fact that her Stafford loans are federally regulated. The college has to follow federal guidelines on those loans. So the moment her need as defined by FAFSA is reduced by any grant (not loan), then any government subsidized loan loses its subsidy. So the college will take that loan out of the financial aid package up to the amount it is replaced by the new grant… If she still wants the loan, she can get it if she still has EFC unmet by aid, but it will be an unsubsidized loan just like what is still sitting out there unused. It is no longer part of her financial aid package at that point and if she wants to take out the loans, she will only be able to do so it the total COA less grants including outside awards, leaves an outstanding amount. That outstanding amount can be met by unsubsidized Staffords, private loans, PLUS, HELOC, whatever, but is not considered part of the financial aid package and that part probably cannot be what the outside scholarship can be applied to. </p>
<p>This is a typical scenario in a school that meets 100% of need and only counts subsidized loans as part of a financial aid package. But schools can do things differently, so you have to ask the financial aid office and go through your specific example.</p>