Accept direct student loan and then drop below half time?

Paying for College
1

Hi all, I am a graduate student. Full-time is 9 credits. Half-time is 5 credits. I have ONE 3-credit course left before I graduate. I was registered for THREE 3-credit courses when my FAFSA was approved for a direct unsubsidized loan (from the US government, not a private lender) because I had not chosen which one I wanted to take and I wanted to save a slot in each.

The term has not yet started, but I have already dropped the two unnecessary courses, making me below half-time now. It currently still offers me the option to “ACCEPT” a loan that is actually higher than what I currently need (It was offering me ~$10k for the fall semester estimating that I’d be paying more. I will now be paying only ~$4k).

It is stated that I must be half-time to qualify for direct loan. My questions:

If I try to accept it, will I be committing fraud since the loan was offered under different circumstances and I no longer fit the criteria? Will it remain or will it cancel?

If the option to “ACCEPT” disappears, would I be doing anything wrong/illegal if I register for a second class to be above half-time and then drop it before the drop period? Would the loan be cancelled forcing me to pay out of pocket or finance privately?

2

You won’t be committing fraud because once you go below 50% the loan availability will change and it won’t be funded. If you do it after the term begins but before the drop/add date, the school will reverse the loan and you’ll owe it back to the school immediately (not under loan repayment).

Either take the second course (and pay for it) or you won’t get a student loan for this term.

3

Although you can accept your loan, it won’t pay to your account if you are not enrolled at least 1/2 time. As for your question about enrolling/dropping, you should ask your school’s financial aid office what would happen in that case.