<p>I just thought of another scenario where paying an old loan can conceivably hurt your financial aid situation. If you make enough money during a year so that your financial aid award is going to be reduced, you had better not use those funds to pay off certain loans since your pay is going to be hit up for college costs. That you don’t have the money because you paid off old college loans isn’t going to cut it. You still aren’t going to meet the eligibility if you are in that situation.</p>