<p>I heard a story of someone who worked very hard to pay off their undergraduate loans and then was slammed when going to graduate school. Then this other person decided to spend normally, not pay off their undergrad loans, and got very generous financial aid when enrolling in graduate school. They ended up having the same amount of debt.</p>
<p>Is this story very unique or does it happen often?</p>
<p>Your undergrad loans do not affect your graduate level financial aid. Quite honestly, if you can afford to make payments on your undergrad loans, you should. Your loans are growing larger day by day because of the interest. If nothing else, make some of the interest payments now before you accumulate additional loans for graduate school.</p>
<p>So are you saying graduate schools don’t look at the debt of undergraduate loans when offering Financial Aid?</p>
<p>The FAFSA does not consider debt.</p>
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<p>You got that correct. Graduate schools do NOT look at unergraduate debt when offering financial aid. In fact, there is absolutely NO PLACE to indicate undergraduate debt on any of the financial aid application forms I’ve seen (FAFSA and any school finaid forms). </p>
<p>Graduate student aid is VERY different than undergrad aid. There are no “meets full need based on EFC” schools. And there are no Perkins loans. Federal aid is limited to Stafford loans. Most grad aid is based on merit based on what you bring in your application and comes in the form of school grants/scholarships, assistantships, fellowships, and the like.</p>
<p>Would it be different if the grant came from Harvard Business School? Did the aid come from the fact that the person I know had a lot of debt from undergrad or just had very low income/assets?</p>
<p>The aid probably came because the student was attractive to Harvard Business School. I would hazard a guess that it had NOTHING to do with undergrad debt at all…it’s not considered at all. Almost ALL grad students have very low EFCs per FAFSA…they are independent and not working…not much income or assets if any. Grad schools do NOT meet full need based on this at all. MOST aid is awarded based on merit and the school’s desire to have a student attend for grad school.</p>
<p>Someone…please correct me if I’m wrong.</p>
<p>Thumper, grad students actually can receive Perkins loans. I don’t think alot of schools offer them to grads though.</p>
<p>Yes they can receive loans (Perkins and Stafford) but there are no things like Pell grants and SEOG.</p>
<p>I know a number of kids who have some undergraduate loans at very loan interest rates that they got some years ago. In their situations, the graduate school loans are at higher rates, so it would behoove them to take out less in graduate loans, pay back as little as possible on the the low interest undergrad loans if they can defer them even longer. That way they are putting money towards graduate school costs that would otherwise being going towards repayment of lower interest undergraduate loans while taking out higher interest loans.</p>
<p>We are kind of caught in this quandrey ourselves with PLUS. We have to work out our loan situation very carefully. We took out PLUS and our son took out Staffords. However, the Staffords have a favorable interest rate so it was financially smarter to take out the maximum Stafford even though my son’s share of the cost was not that much and we decided to take on that excess amount subtracting it from the PLUS we were going to take. We were thinking of paying his Stafford accumulating interest for him while in school, but then it occurred to us that if we are taking out PLUS loans for higher interest and paying back his lower interest Stafford, it makes no sense. We have to carefully write down what we are doing. Next year, I am hoping not to take out any PLUS amounts and pay off our current PLUS with extra payments before paying any Stafford amounts. It’s a lot easier just keeping the loans separate and paying them that way, but it makes financial sense to keep those interest rates in mind and pay the higher stuff off first. For that matter, pay off any of your higher interest loans first and substitute with lower interest ones when you can. It is truly enough to give one a headache.</p>