I have heard that everyone qualifies for unsubsidized loans regardless of income.
I have also heard that outside scholarships first replace the student contribution (loans, work) in a financial aid package.
So, can outside scholarships prevent students from having the option of taking a federal student loan?
No
Then would the loans and outside scholarships decrease the amount of institutional need-based aid a student gets (assuming a school that gives this kind of aid)?
Yes, outside scholarships could reduce institutional need-based aid. It can vary from school to school and some stack merit aid.
Are you asking if you can still take a student loan even though it was replaced with an outside scholarship in your FA package? The answer is yes, you can.
If after the merit award and/or other aid, all the COA is covered, then there can’t be a loan.
For example.
$50k COA
$45k Grant and work-study
$50k
5k of outside scholarships is awarded and replaces the $5k loan.
Now all costs are covered, so no loan is available.
Even if your scholarships replace a subsidized federal loan, if you still need more money you could get an unsubsidized loan (as long as total amounts received do not exceed the cost of attendance).
There is no needs test for the unsubsidized loan.
The problem is that a combination of loans and scholarships would decrease the need-based grant from the school instead of the parental contribution so it is not really worth it.
It’s not worth it from one point of view (the student’s) … and worth it from another (the school’s). The need-based grant comes from school money, and the scholarship comes from outside money. Less money spent by the school on one student allows more money to be spent on another needy student … or allows more money to go toward other things at the school.
The same could be said of the outside scholarship money, some other student will benefit from those funds as well.
Outside scholarship apps are a ton of work for small amounts of money, so at this point our goal is to get enough to cover the student contribution. If we find a reasonable full tuition outside scholarship, we will definately try for it but most require you to be pretty close to pell grant eligible (and we are not). Anything over the student contribution and under the school grant amount is of no benefit.
An unsubsidized loan is one where the government does not pay the interest while the student is in school. It is not financial aid and should not decrease a need-based grant.
Loans aren’t decreasing grants.
That is what I am trying to figure out. We would like loans to decrease the parental contribution and scholarships to cover the student contribution without decreasing the school grant. I am getting conflicting answers here. Do you have links that state this?
Again, if the outside scholarship replaces the student loan in your financial aid package you can STILL take the unsubsidized loan and use it toward your parental contribution. Doing so WILL NOT decrease your need based financial aid any more that taking out any other type of loan would. Additional outside scholarships will decrease your need based aid, but taking the loan will not.
Not the case for OP as there is a parent contribution.
Whether or not scholarships decrease the school grant is a school-based policy. Is the school list short enough that you can call each school and ask?
All the federal rules for financial aid should be somewhere on the link below, but you may be pouring through bureaucratic regulations for days and not find what you are looking for. Best to talk to the financial aid officers at the schools.
True, most certainly do but not all. WashU doesn’t for one.
It is really up to the schools, and whether the school is giving need based grants or merit grants, and whether they stack the scholarships or reduce their own scholarships/grants if you get something from an outside agency. I’ve read here on CC that at least some of the Ivies allow the students to keep a small amount, like $5000, in outside scholarships before they reduce any school aid so in those cases the student contribution is able to be met with scholarships. Sometimes the outside scholarships or grants have their own restrictions. If the scholarship is for tuition only, and the school’s aid is for tuition only, then there may not be room to stack and you’d still need to pay room and board with other funds
My daughter’s worked with me to apply all the aid in the way most favorable to her so that she can use every penny and not forfeit anything. It took some advanced math to apply all the school funds to tuition, fees, and a small meal plan (school will not rebate any of its money to the student), leaving some grants refunded to her to pay off campus rent. She can also take the loans. If she got another outside scholarship, and that scholarship allowed it, she’d get to keep that money to use for whatever she needed (books, rent, meals, transportation).
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Ok. Thanks. I will ask the individual schools.