Like so many others, we are still waiting for all the FA packages to come in. We have one in hand that is from a college that does not guarantee to meet full need. The package they sent includes the Fed Direct Subsidized loan and the Fed Direct Unsubsidized loan as a part of the school’s award.
I called for more info and they said that ALL schools will offer those loans as a part of their FA package. I do not consider these loans to be a part of the school’s FA. They are loans! Telling me I am allowed to go out and borrow money is not really aid from the school. :-w
This whole process is so convoluted. I have called one of the schools (a meets 100% school) we are waiting for…a couple times, and each time, though the conversation was confusing, it sure seemed like those loans would come AFTER they’ve given you aid to get you to your EFC. Meaning you can then choose to use those Federal loans as a way to pay your EFC.
So…is this guy right, that ALL schools will use the Fed loan as part of their package to get you closer to your EFC? Or will SOME schools meet your need, down to your EFC and then offer those loans as a way to pay for part of the EFC?
Well, if not ALL, at least MOST are going to include the direct loan in the aid package to get you closer to the EFC. Your or my belief that a loan, in general, is not aid is immaterial. This is what’s done. The loan does not come from the school but the federal government. You do not have to accept it. And the subsidy (free interest) on the subsidized portion probably should be considered aid. Some would argue that letting an 18 year old kid borrow money in his or her own name with no cosigner IS aid.
Even schools that don’t claim to include the direct loan in the package will often require a student contribution that is (surprise!) about the amount of the direct loan.
The vast majority of schools do not have the money to cover the need of most students as it is defined by FAFSA. Even if grants and scholarships and any other sources of free money are applied first, there are often gaps between award and EFC that the direct loan is going to be included to fill it, leaving you with at least the full EFC to pay, if not more.
Almost all colleges will use the federal direct sub and unsub in order to fill unmet need yes. unmet need = COA - family contribution.
The exceptions are Ivy and other similarly well endowed colleges for certain income levels. For some Ivys, they will give full aid w/ no loans at, say, 60k income and below. So then you may use your student loan for EFC.
oh, and to answer your title question ‘are they required’…no, of course they are not required to. Mine did not have any. It is just one component of the aid that is assembled. If they left it out you would have a gap in your package. A student loan sized gap of 5,500 lol.
No, but as mentioned above, most colleges/universities other than the very tippy-top, heavily endowed schools (think some but not all Ivies) do include student loans (Stafford and sometimes Perkins) as part of the student’s aid package, so they can’t be used to reduce the college-calculated EFC. Haverford, for example, which until recently did not include loans as part of its packages, has announced that it may now include them. Some preferential packages (for example, for recruited athletes at D3 schools), may also be loan-free. I would expect student loans to be included in most cases, but really don’t like it when Parent Plus loans are included as part of students’ aid packages.
It is common for schools to include federal loans. They amounts aren’t unreasonable, and it IS reasonable to expect students to contribute to their own educations in that way, especially if they cannot lay out cash. Students who are contributing to their own educations tend to work a little harder. Free would be nice, but why should the school assume all the cost? Federal loans can be set up for income-based repayment schedules and become manageable.
Average Penn student loans are around 20K for four years (just was an article in the DP about it). Like other schools, they say they are loan-free but aren’t, because the EFC is full of bull for families that have expenses. In effect, they don’t have Federal loans so Penn students have private loans entirely.
There are schools that meet full demonstrated need by offering grants ‘that need not be paid back’. There are schools which will arrange for loans beyond any grants they can offer. Yes, it is confusing to call them universally “financial aid”, that’s why some of the financial aid advisers at our kids’s school asked us to be careful with “what kind of financial aid” is offered by a school, before even applying.
Having said that, those schools which fully meet the demonstrated need, do realize that some of the parents may not be able to meet even the EFC to pay for college for various reasons. In such cases they do offer possible solutions through raising loans to fill the gap. Some schools, like Princeton, have no loan policy. I do not know how exactly it works. Since most of the parents know and feel that covering the FAFSA EFC itself is really breaking their backs.
I feel, that it is not worth attending a school that only offers loans as financial aid, with no grant money!
It really depends on how much endowment the school has for offering additional aids. The loans and workstudy are considered Federal aids. Then there may be grants from the state and the school. So a typical FA package with need would start with loans. My D originally got an estimated FA package with loan and workstudy, but the school replaced them with grant from the school later on. So on my D’s final FA package, it only has scholarships and grant (and our EFC as it is a need met school). The grant amount was reduced a couple times though whenever an external scholarship came in.
All these financial aid offers need to be examined carefully. You just can’t compare them by using the bottom line as stated by the college. My daughter’s offers had differences about how work-study was considered–some schools included it in the “aid” offered, and some did not although she was given a work-study job.
Several of her offers included Perkins loans of up to $5k/year in addition to the Stafford subsidized/unsubsidized loans.
And most of which remains current. I’d expect to double-check any 3rd party info with the college itself before relying on it, but this is a heck of a good place to start!