<p>My daughter will be starting college in the fall. Her financial aid package includes grants and loans. We could probably pay more than required by the school, and take out less in loans. But I'm concerned that if we don't take out the full amount of loans, the school will cut back on grants for the next year. Is this likely to happen?</p>
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Call the school and ask! Also ask if her grants will remain the same if your financial need stays the same, because some schools give less grant money to upperclassmen, since you are a captive student and unlikely to leave.</p>
<p>If you are really worried, you could always take the loans and just put the money in a cd. After she gets her financial aid award for her senior year in the spring of her junior year, just pay back all the loans at that point. You will lose some money on the spread, but it may be cheap compared to what you might lose in grants. Plus, if your financial circumstances change, you will have money available if your aid doesn’t also increase.</p>
<p>I had thought about calling the school, but if I ask them, I’m concerned that they will put a notation in my daughter’s file that says “she doesn’t need as much grant aid next year because they don’t need all the loans.” Taking out the loans is a low risk strategy, because we can save the money and then pay off the loans when she graduates. But she is unhappy about having her name on large loans.</p>
<p>I have not seen that colleges reduce grants and scholarships because of the family not take loans. </p>
<p>Now you will see colleges adjust free money sources as the availability of loans increases. Sophomores get $1,000 more in Staffords than Freshman, so $1,000 is eliminated somewhere else in the 2nd year award.</p>
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Oooh, paranoid! ;)</p>
<p>Call them up from a phone that can’t be traced to you (i.e., caller id doesn’t id you you personally or you surpress it) and ask them without giving your name. </p>
<p>Unless they voiceprint your call and surreptitiously record you when you drop your kid off, I think you’ll be safe. :)</p>
<p>“Her financial aid package includes grants and loans.”</p>
<p>What kind(s) of loans (i.e., Stafford, Pell, ???) ?</p>
<p>Mostly subsidized Stafford but also some Perkins.</p>
<p>I’m pretty sure the FA office has more to do than track general phone inquiries! But, it does make some financial sense to take the subsidized loans. First, explain to your daughter that federally subsidized loans come with certain benefits, namely the interest does not accrue while she’s in school and if, in the unlikely event she died, they would be forgiven. By taking them, your contribution could be saved for later years when her aid package may be lower or her costs higher (think study abroad, grad school, general tuition hikes) and the interest earnings on these saved contributions would be building up. At the very least, your contributions could go toward making a lump sum payment on her loans when they come due after graduation.</p>
<p>^ I agree; if you have the personal financial option of taking them or not, I’d take them (we did) and pay them back early (we plan to).</p>