<p>The only situations that I can think of where paying down a loan can hurt a student’s ability to get financial aid is if the loan repaid is a HELOC where where the value of the house is increased by that amount and the college issuing financial aid takes that home into account in the asset, and if there are prepayment penalties or conditions on the loan which might occur, in some private loans, though I have never personally seen such a situation.</p>