<p>My daughter is going to an expensive private school, and I've been getting a little discount (school scholarship) due to the way the financial aid calculations fell out. That's the good news. And freshman year, we got the best kind of loans ($3K in subsidized federal direct loans). But when the offer came this year, it was for $3K in UNsubsidized federal direct loans. So, what's the deal? How does the FAO decide which to offer?</p>
<p>I've been looking around, and all I've found is that to get the subsidized loans, "a student must be judged to have need by the college." But I can't find anything specific as to exactly who makes this determination, and what details they use to make it.</p>
<p>In my case, there are two differences in the FAFSA input, from freshman to sophomore years' forms. Both increases to income, but only one "real" increase. The real increase was that I had 10 months of income on the freshman form, and 12 months of income on the sophomore form. The other income difference was that I had a traditional IRA to Roth conversion that artificially increased income. I had discussions with the financial aid officer and they said that would not affect aid, but I'm not so sure. The "need" situation remains essentially similar, year to year. I'm paying a little more (out of pocket increased by 12%), and the "discount" is a little less (school scholarship dollars reduced by 14%).</p>
<p>My question is, exactly what is the process of determining if you get the subsidized loans? Which would answer the question of "why is it that we got switched out of the subsidized loans?"</p>
<p>You can go to staffordloan.com to get information about the loans. Your increase in income may have been just enough to trigger the change. The difference between sub and unsub is cost of attendance vs. estimated need.</p>
<p>I was just delighted to discover that my daughter got switched from unsub to sub. She’s in a three + two program and the feds must consider her a grad student even though she’s in her fourth year… she has more credits than she needs for her BS… I get so confused! Dang, I could’ve done her FAFSA without mucking through my tax records.</p>
<p>I always figured that it was impacted by who all was applying for aid that particular year since the mix of kids changes every year causing where we fell in the “need” continuum to change. Neither of mine were/are at “meets need” schools. I definitely think there is a desire to spread it around and they try to “touch” as many kids as they can. We only “saw” subsidized loans last year when I had 2 in college at the same time and one previous year when I had been unemployed (family breadwinner) for an entire calendar year.</p>
But subsidized direct loans do not have limited funding, so they do not need to be spread around (unlike Perkins loans which do have limited funding). Every student who has need is eligible and is not affected by how many other students are eligible. A student who has unmet need (school’s COA less EFC less any other aid/scholarships) should be able to get a subsidized direct loan for the amount of the remaining need up to the limits for their year in school. So if a freshman has $5000 need then he should be eligible for $3500 in sub loan, if he only has $2000 need then he would be eligible for only $2000 subsidized loan.</p>
<p>sengsational: Did your EFC increase? If your EFC increased you may not have enough need to be eligible for the subsidized loan. Sub loans can not be used toward the EFC, but unsub loans can. Remember you must take the school’s COA and deduct your EFC and also any other aid or scholarships to determine if there is outstanding need that can be met with a sub loan. Also did you ask for a special circumstances adjustment to take the income from the IRA/Roth rollover out of your AGI? That income would have increased your AGI and therefore your EFC. That would reduce yoiur need, but the school can make an adjustment to that. They may not do it automatically, so you probaby would need to ask.</p>
<p>I was under the assumption that if you simply have demonstrated need (COA-EFC), then you qualify for the unsub Stafford. However, I saw recently on fin aid.or that they give an income breakdown of who gets it, and if you are above 100k, it looks like there’s not much there:</p>
<p>“About 2/3 of subsidized Stafford loans are awarded to students with family AGI of under $50,000, 1/4 to students with family AGI of $50,000 to $100,000, and a little less than 10% to students with family AGI over $100,000.”</p>
<p>So, I’m still unsure of who determines if unsub can be offered - is it a federal formula based on income, or does the FA officer have discretion as with SEOG? It seems like just having demonstrated need is not enough.</p>
<p>Sub eligibility is always COA-EFC-all need based aid. Unsub eligibility is always COA-all other aid (including any sub that may have been awarded); it is awarded last. Neither have anything to do with any other students at the school. The stats to which you refer are simply stats … they have nothing to do with individual situations.</p>
<p>A rollover can get “lost.” If you are not verified, the school has no way to know that the rollover should be removed from your AGI. If you were verified but the tax return did not say “ROLLOVER” on it (or if the FAO missed it), it won’t be pulled out. If you were verified but did not have to submit a tax return because you did a direct IRS tax info transfer, there is no way for the aid officer to know you had a qualified rollover (think about it …). Some schools may require you to submit a special circumstances review request even if you were verified & did submit a tax return clearly marked with “ROLLOVER.”</p>
<p>Call and ask the school’s financial aid office.</p>
<p>It’s finite in the sense that there are annual limits based on year in school, as well as aggregate limits for undergrad/grad. It is also finite in the sense that COA cannot be exceeded. Other than that, though, you could earn a million dollars a year & still be eligible for an unsub loan (as long as you file FAFSA & complete any requirements of your financial aid office such as verification).</p>
<p>Hmmm… I know of several individuals that had had a FAFSA EFC higher than the COA, but then had a PJ from the school and were subsequently awarded a school IM grant, federal work study, and an unsub loan. If they were deemed to have need, even if due to PJ, shouldn’t they have still been eligible for an sub loan? Or, were they not eligible for the sub loan since the FAFSA EFC was higher than COA? What else could be going on here?</p>
<p>kelsmom, does the “COA-EFC- all need based aid to determine if you are eligible for a subsidized loan” also include any merit aid you are receiving, even though it has nothing to do with need? My D doesn’t receive any need-based aid and is offered only unsubsidized and parent plus loans, but she does receive a merit scholarship. She was first offered a merit scholarship in a lesser amount and her FA package had a 2000 subsidized loan included. When they increased her merit award, they replaced the subsidized portion with unsubsidized.</p>
<p>^^ Yes. Merit based aid reduces need. COA less EFC less scholarships less all other aid = need. If there is no need, a student is not eligible for a subsidized loan.</p>
Perhaps their need under the PJ was met by the grant and the WS. If their need was already met by the grant and the WS, they would not be eligible for a sub loan.</p>
<p>So, your income went up and the school thought that it went up enough to switch you from subsidized to unsubsidized?</p>
<p>My understanding is that the subsidized/unsibsidized decision is primarily driven by the federal FAFSA and the EFC, augmented by the financial aid decisions made by your kid’s school. My understanding is that there is less subsidized mnoney to go around this year and there are more kids that qualify, so it’s not surprising that income levels to qualify for subsidized aid went down. It’s also not surprising that there is no source for the “the formal method” that your school uses, beacuse it’s my understanding that each school has it’s own proprietary black box aid calculation methods. </p>
<p>It might be worth a call to the school’s financial aid office to find out more about this general aituaqtion , then to follow up with a reconsideration letter that describes your specifics to see if upon reflection they might make a different decision . . . and to point out the phantom increase in income from the Roth conversion.</p>
<p>It’s all a process, and you aren’t done yet :-)</p>
Campus based aid such as the Perkins (a sub loan), WS, and SEOG have limited funding at each school so the schools have to decide how to award those. They can’t award more Perkins, SEOG, or WS funds than they have. Direct subsidized loans are only limited by a student’s need (COA less EFC less other scholarshps/aid) and the maximum for their year in school. Income levels to qualify for subsidized direct loans have not gone down.</p>
<p>^^as i understand the post from Kelsmom, there are no income levels for a subsidized stafford loan - all that is needed is demonstrated need. As she said - your income could be a million dollars and you’d qualify for a sub loan if you are determined to have demonstrated need. </p>
<p>For swimcatsmom - here is an example from one school:
calculated need by the school= $12K
Aid package given was:
Grant - $5K
Work Study - $2K
Unsub loan - $5K</p>
<p>It seems that this student (a freshman) should have gotten $3K sub and $2K unsub.</p>
<p>Yes, in your scenario (assuming the need is based on FAFSA EFC, not CSS or some other school specific form) I would have expected to see the max sub loan of $3500 and the balance as unsub. Did they ask why they did not get a sub loan?</p>
<p>^^Maybe that’s the issue. FAFSA EFC for this student showed no determined need, but when an appeal was made to the school (a CSS school), the school granted a PJ and determined need at $12k. I thought that when a school made a PJ and determined need, and they are awarding federal aid (which includes work study, right) that they would actually need to go in and change values on the FAFSA so that they could award aid, otherwise it would be an overaward. Since this student got federal work study, i would think the school would have had to adjust the FAFSA EFC to make federal aid available, right?</p>
<p>Or, does the fact that this student only got an unsub loan mean that the school is only awarding institutional aid with their PJ and cant give federal aid (sub stafford)?</p>