Please let us know how it goes.
You can get the $5500 loan whether you qualify for FA or not. It’s not need-based. The only part that is need-based is whether $3500 of that loan is “subsidized,” meaning no interest during the time the student is in college. To avoid compounding, you can just go online and pay the interest two or three times a year, while she is in college. It will be a small amount.
As for work-study, even if the student does not qualify for work-study, she can still get a job – and often the same job as work-study students would get. The only difference is where the money to pay them is coming from. So, you already have access to the two things you want – the loan and the job – even if you don’t qualify for FA!
OP will not qualify for the $5500 direct “subsidized” loan. And paying the interest on the unsubsidized loan while the student is still in school makes no more sense than just borrowing less. Since the family is going to be needing money for 4 years of college costs, I’m not sure why there would be an expectation that more money is available to pay the loan interest. But I guess that’s for the OP to manage.
This is a scary thread and borders on “how to move mountains so my kid can get into their dream school”. There’s a school out there for everyone, how about letting the chips fall where they may?
@NEPatsGirl I don’t think that’s the case at all. The OP does not have much financial need, they may not even get anything, so they are prepared and willing to pay full price. OP just trying to present her D in the best light possible. She think she is just making sure she dots all the i’s…
There is no $5500 direct “subsidized” loan. The maximum amount subsidized is $3500. The other $2,000 is always unsubsidized. I know they won’t qualify for the $3500 sub – but they can still take the $5,500 maximum student loan for the year. I suggested paying the interest a few times a year so that it does not compound. The current interest rate, fixed for the life of the loan, is 5.05%. A $5,500 loan on a 10-year term will cost less than $25/month in interest. I’m thinking this family could pay it. It’s either pay now or let it compound and pay more later. Taking a smaller loan is not equivalent if you need the full amount up front.
@RandyErika The thought behind taking the loan out is this: In order to pay for college we would take money out from an acct that would require us to pay taxes on what we take out. By taking the loans we would just pay them off in full as soon as D graduates, just postponning withdrawing some of the money until the fifth year. It’s not about not having the money. We were under the impression that there would be no interest if we pay it in full when she graduates.
What makes one qualified for the unsubsidized loan? Thanks
“We were under the impression that there would be no interest if we pay it in full when she graduates.”
Not for your income bracket. The loans with deferred interest - no interest owed until graduation are the subsidized loans. You will not qualify for those.
You (your DD) will qualify for loans, but there will be interest and it will start to accumulate when the loan is made. There will also be a origination fee for the loan. If you have the money sitting there anyway, you will want to understand the origination fee and how the interest works since.
@NEPatsGirl Wow! I don’t find this thread scary at all. It’s not like I asked if we should sell our home to make a sizeable donation to the school in order to get our child in or asked whether we would be okay eating Kraft Mac and Cheese for 4yrs in order to be able to pay for college. I thought my question was reasonable.
@wisteria100 Thank you so much for articulating what I can’t seem to:))
@citymama9 As you suggested, my impression was that you were looking for ways to manage your money, as opposed to not having it. That’s why I noted that you would not qualify for the subsidized loan. I too was hoping for an interest-free loan - when that wasn’t realized, we decided to pay without incurring any debt.
Just mentioned what was said above to DH and he said if we have to pay interest we would not bother taking out a loan as it defeats the purpose. I still would like to know who qualifies for subsidized?
https://studentloanhero.com/featured/whats-the-difference-between-subsidized-and-unsubsidized-student-loans/
This link explains the subsidized and unsubsidized loans well.
Who qualifies for subsidized? If your income bracket qualifies you for federal financial aid, you could qualify for a subsidized loan. It is based on information you provide on Fafsa. It’s no secret. You just make too much 
And circling back to your original question about whether it was advantageous to check the box that says you are not applying for financial aid…
- If all you're looking for is work study and subsidized loans that's a silly reason to apply for financial aid. You will not qualify for subsidized loans and the unsubsidized loans can be applied for later at any time. And your kid can just as easily get another non-work study job to cover that piece.
I’m not telling you not to apply for financial aid. I’m just pointing out that one of the two things you hope to get isn’t going to happen and the other thing is easily done in another way. So…
Just to make sure you know … the money from work-study jobs is paid as the student works. She would get it on the regular payroll schedule. Therefore, that money is not available up front to pay the tuition bill. It does come in handy for spending money, though.
Chiming in late (and didn’t read everything) to say our EFC was about $60k and for colleges that don’t offer merit (as a policy) , most offered my D about $7500 in work study and the unsubsidized $5500 in loans as the need aid “first” and then in a couple cases a little bit to no of grant $ after that. (Exception was a no loan college that offered straight grant money.)
But anyone can take the federal loans – even w/o them being part of the package – and your D should be able to get a job anyway. These were 100% need college, CSS profile colleges, just fyi. She applied RD.
Point being you might not get much / any in grants anyway. I like the idea of applying for need the 2nd year forward.