Outside Scholarships and Loans

Paying for College
1

<p>Hi all. I have a hypothetical that I would like some opinions on.</p>

<p>COA: 40,000 (includes tuition/fees, room/board, transportation/books/incidentals - the full COA for a year of school)
EFC: 5,000 (same on FAFSA and Profile)
Freshman student</p>

<p>Financial Aid Package from School:
Merit Scholarship: 10,000
Need-based grants: 19,500
Sub/Unsub Fed Loans: 5,500</p>

<p>So as you can see, all need has been met through scholarships, grants and the available loans for a freshman.</p>

<p>Student received $2,000 in outside scholarships. School has told him that outside scholarships can be used to reduce loans first, before the need-based grants are affected.</p>

<p>So, I assume the school would reduce the amount of loans in the "package" by $2,000 (effectively removing the unsubsidized loans). BUT, won't the government allow you to borrow up to the $5,500, provided it is less than COA minus grant aid? So wouldn't that be 40,000 - (19,500+10,000+2,000), or $8,500?</p>

<p>Which "trumps" - the school's determination that you only need $3,500 to meet all need over EFC, or the government's formula that allows you to borrow up to the lesser of $5,500 or COA minus grants?</p>

<p>If the student goes ahead and borrows the full $5,500 (essentially allowing some of it to go toward the EFC), what would happen (if that is even possible)? Will the school put a cap on the loans at $3,500, forcing the student/family to pay the full EFC?</p>

<p>Also one other question - the school makes you purchase health insurance at $2400/year, unless you can waive. Our insurance is not so good and won't provide coverage in the area of the school, so we are signing up for the student health insurance. Yet, that doesn't seem to be included in the COA. Is that normal? Should it be included if it is a required cost of attendance? </p>

2

<p><a href=“Cost of Attendance | Financial Aid”>http://financialaid.ucmerced.edu/cost-attendance&lt;/a&gt;&lt;/p&gt;

3

<p>

Some schools’ COA include health insurance, some don’t. </p>

4

<p>Thanks for that link to one school’s reference to health insurance as part of the COA. That got me thinking, and I poked around a bit more on my son’s school’s website, and found that it is possible to request a “budget modification” for various reasons, one of which is actually that you ARE using the school’s health insurance (and they will then add it to your budget). I also found out that you can get a budget increase for a one-time computer purchase, and since my son just bought a new computer, he will be able to get that added to his budget also. That should increase the COA enough that he will qualify for the full amount of direct loans even with his outside scholarships.</p>

<p>Problem solved. :-)</p>