<p>My dd received need-based aid from her college. However, she just received a $4K merit award from a local organization. She has the option to defer the award for one year.</p>
<p>The LAC she will attend reduces the grant portion by $1K and then applies the remaining $3K to reduce loans and work-study. Her aid package includes subsidized Stafford loans and work study. </p>
<p>Scenario #1: Using the award for 2005-2006.<br>
It would eliminate the Stafford loan for the year ($3000 - $2625), with the remainder reducing the amount of her work study. </p>
<p>Scenario #2: Deferring the award and using it for 2006-2007
She would owe $2625 for 2005-2006 (lower interest rate?) and $500 for 2006-2007 (higher interest rate?). She would need to work the full amount of her work study both years but that doesn't count against her as "income" when calculating the next year's aid. </p>
<p>I think she would be better off deferring for a year but I may be missing something. Would you recommend that she take the award this year instead of deferring -- and why? Thanks!</p>
<p>Just some random thoughts - what if she left school after the lst year (to take a year off, say, or for some reason you can't anticipate like health or other opportunity) - then she would lose the $4,000, wouldn't she? I'm a very big believer in the idea that we can't predict - we plan that they'll go through four years straight, but I've known too many stories where things work out differently. Since she's attending next year and will be racking up the costs, why not spend that award now? </p>
<p>The cost of tuition will rise next year, making the $4,000 a lower percentage of the total cost of attendance (maybe this doesn't matter). </p>
<p>I think a bird in hand - should be spent. Why incur interest costs when the money she would be delaying would not be earning interest?</p>
<p>Lefthandofdog, thank you for your reply. You've suggested some possibilities that I did not think of -- and that's precisely why I appreciate the suggestions and observations of the CC community.</p>
<p>With a subsidized Stafford loan, there is no actual "cost" to the loan for my daughter until she completes her schooling. The federal government subsidizes the loan so that there is no accrual of interest until repayment is required (typically after graduation).</p>
<p>My thinking is that the current interest rate, while variable, will still be lower than the flate rate of (I believe) 6.8% for loans awarded after July 2006. I think it is cheaper to borrow more money this coming year (at a lower rate) and borrow less money next year (at a higher rate). </p>
<p>But again, I may be missing something here....</p>
<p>b-u-m-p please.... Need to figure this one out by Monday!</p>
<p>I'll try to bump one more time since the slocal cholarship organization needs to know whether to defer by Monday am. We would appreciate any other suggestions/observations since this is one I don't think we can pose to the LAC finaid. Thanks for your help!</p>
<p>I would go ahead and use it-you never know what will come up next year, she could get other scholarships, parents could change jobs and affect financial aid. It just seems better to me to avoid taking out the loans for as long as you can. Also, I like the idea of not having to worry much about money the first year, maybe because I'm concerned about transitioning from my small, non-challenging high school to a very challenging college. If it would reduce the work study as well as loans, it would give her the option of working less if she finds it hard to keep up with a job and classes. Next year, she'll have the routine down.
That's how I'm looking at my outside scholarships--I don't actually have the option of deferring, but it was my goal to get my work study reduced for the first year just in case I have trouble keeping up next year.</p>
<p>My son also has a couple (though much smaller) scholarships that could be used this year or next. He requested that we use them this year to eliminate his work study. He would rather take out loans and have more time this year to adjust to college. The freshman year can be a big adjustment, and if it is possible to reduce work study, that gives a little more time for studying and, in my son's case, practicing his instrument (music major). It is just one less thing to worry about.</p>
<p>There is the old "bird in the hand" argument that is quite relevant. But that may well be a chance you want to take. The second year payment is always so much more difficult than the first year's. It is really nice to have that $4000 coming. The only question, I have is if that has to be reported to FAFSA since it is something you know that you have. I have never heard of an option to defer a scholarship. You might want to run over the implications of what this will do for year 2, when you fill out the financial aid forms for next year. Another (yes, I know you are tired of it) call to the financial aid officer (and , yes, they are tired too, but that is their job), at the college may be in order so you do not get any nasty surprises if you do defer the loan.</p>
<p>Jamimom, the sponsoring organization sends the check to the college and offers the option of sending it next year instead. (This is a common practice in our area for local scholarships.)</p>
<p>But you raise an interesting question: Do scholarships get reported on FAFSA or Profile before they are received? (Or after they are received, for that matter. I don't remember being asked that....)</p>
<p>Profile does ask about any other possible sources of income including relataves willing to pay. I am just concerned that the $4000 that you know is coming will be counted against you from the onset of the financial aid calculation by the school for next year.</p>