<p>I really appreciate your advice, since this is all new to us and am frantically trying to research and understand it all as my daughter makes a decision where to attend college! We'll be putting our family in a very tight financial spot to send her to school, so trying to make the best decisions and even $1,000 one way or another can make a big difference :)</p>
<p>I understand that the maximum amount a student can borrow the first year is $5,500. Does that limit apply only to the Stafford, or does it include the Perkins?</p>
<p>In other words, if a FA package includes:
$3,500 Stafford
$2,500 Perkins
How much additional is it possible to borrow? Can the student borrow an additional $2,000 on Stafford, or just an additional $500?</p>
<p>And the follow-up question is: if the interest rate on the Stafford is 3.8% and the Perkins is 5.0%, wouldn't it make more sense to max out the Stafford amount before dipping into available Perkins funds at a higher rate? Why would the college package it this way, do you think?</p>
<p>One thing you MUST remember about the Perkins Loan. There is NO guarantee you will receive it in subsequent years. My DD (oddly) got it for two years, but not for her junior and senior years.</p>
<p>College is a FOUR year (at least) financial plan. Your finances need to work for ALL four years. </p>
<p>So is it true then that technically she could borrow an additional $2,000 in subsidized Stafford PLUS an additional $4,000 Perkins (if the college has that available) in order to meet her EFC? (And, if so, from what @thumper1 is saying, perhaps it makes sense to borrow that full amount this year since it’s available, and not borrow from other sources until later, in case the Perkins gets taken away?)</p>
<p>I believe the subsidized limit is $3500. Anything beyond that would be unsubsidized.</p>
<p>If your kiddo doesn’t have a Perkins loan in her package NOW, it is not likely that the school can just add that in. Funding for the Perkins is LIMITED.</p>
<p>Her package (at a meets-full-need school) includes the following aid to read Cost of Attendance:
$3500 subsidized Stafford
$1500 Perkins
$2100 work-study
grants to make up the rest</p>
<p>So I am trying to figure out whether or not she/we can borrow any more subsidized funds to help with the EFC (which we cannot come near affording without borrowing…)</p>
<p>Also, whether it makes sense to max out the Stafford funds before taking Perkins at a higher interest rate.</p>
<p>Perkins loans are subsided. The $2000 additional Direct Loan (hat is the same as the Stafford) is NOT subsidized. </p>
<p>If it were me, I would take the subsidized loans…direct and Perkins as listed. Those have NO interest accruing until AFTER your child leaves college.</p>
<p>But do keep in mind…the school cannot award you need based aid in EXCESS of the cost of attendance, and that INCLUDES your EFC. College financial aid is meant to pay for ONE year of college, not as a profit making venture.</p>
<p>“But do keep in mind…the school cannot award you need based aid in EXCESS of the cost of attendance, and that INCLUDES your EFC.” But remember that unsub loans are not need-based, so those can be awarded in an amount that exceed COA-all other aid (up to the max for year in school).</p>
<p>And it is true that Perkins may have a higher allowable max, but it is very rare to be able to receive an increase in Perkins upon request. This is because Perkins is a federal loan that is administered by the school … and the school cannot award more than it has to offer. It’s usually gone VERY quickly.</p>
<p>Oh, staceynell, a student can borrow A LOT more than $5500 a year. That $5500 is just what a student can get freshman year on his/her own name as long as official Cost of Attendance less any other financial or merit aid. Up to $3500 can be subsidized if there is need as defined by FAFSA . Up to $5500 in Perkins can be awarded, subsidized if there is need, again as defined by FAFSA, but Perkins is something that has to be given by the school and is usually limited whereas the Direct loan these days is an entitlement. The Direct loan schedule is $5500/6500/7500/7500 over four years, but if a parent applies for PLUS and is turned down, the student can get $5K more in Direct loans (not sure if that’s across the board each year, but it’s close), on an unsubsidized basis.</p>
<p>So a student could end up with about $ 70-80K in debt by the time s/he graduates, because only some of those Direct loans are subsidized and the others start racking up interest the instant they are disbursed. </p>
<p>What’s nice about taking the Perkins loans if they are available is that they are subsidized and they also do not affect the Direct Loan maximums. My advice with them is to take those PErkins when you can, because you cannot always get them and it’s not in your control when you can, and those Direct loans are. </p>
<p>We don’t like to think about this, but sometimes kids take longer than 4 years to graduate. If you leave some Direct loan money left, that is an option for an extra term or year. Perkins, as I said, you have no control as to whether you can get the money or not, even if you have not reached the maximums, because the funds are limited most of the time. </p>