Post deletedThis is a good point - leverage education - I didnât know it was possible. Exactly how do you get subsidized loans?
If you qualify for 100% subsidized loans, it is just over $19k because each year $2000 is not subsidized. You also have to pay an origination fee on the loan, so not entirely free.
But if you have the discipline to repay it immediately upon graduation, go for it.
Most students who qualify for subsidized loans need the money to pay for tuition (or food, or travel, or?). My daughter was able to save a little of her because she had a scholarship, and she used that to move to her first job, rent an apt, etc. It wasnât a lot saved but she was happy to have it.
@twoinanddone, thanks for the info. I see. Itâs a subsidized loan so itâs part of the FA.
I am also assuming that the loan doesnât accrued interest until student graduates.
The loan is the direct loan. For those who qualify, all or part of the loan up to $3500 first year (you can borrow a max of $5500 first year) will have the interest paid by the DOE. Interest is accruing, but it is paid by the DOE. It stops being subsidized 6 months after the student graduates (or if the student leaves school for at least 6 months).
Not everyone gets some or all of that loan subsidized.
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@twoinanddone, thanks for explaining.
It seems can be used for tuition or other expenses. Your D made smart use of her loans. Good for her.
Iâm new and learning about FA. We havenât applied yet so I donât even know what we would qualify for or not. We live in an expensive city so salaries are higher than other states.
Your cost of living area doesnât really factor into financial aid.
There are net price calculators on all college websites. I would urge you to run those with accurate numbers from the tax year for the year your child will be starting college. For example, if your child will be starting college in 2023, that would be the 2023-24 academic year. You would use 2021 tax return information.
Are the parents divorced? Do they own property other than the primary residence? Are they self employed or do they own a business? If no to all of these, the net price calculator will give you a decent estimate of your net costs at each college.
The NPC are currently set for students starting college in 2023 fall.
Once you apply for federal aid by filing a FAFSA, youâll get a response that tells you whether you are qualified for a Pell grant. It will also say that you might be qualified for federal loans and/or federal work study. Those are actually done at the individual school level. Most students who apply for federal aid will be able to borrow federal loans (unless they have enough scholarships that their entire cost of attendance is covered, or if the school doesnât participate in the federal loan program - both situations are unusual). The school will package financial aid and send the information to the student. Freshmen can borrow up to $5,500 for the academic year. Depending on the individual situation (cost of attendance, Expected Family Contribution, and all other aid), up to $3,500 of that can be subsidized ⊠but itâs quite possible only some of that that none of it will be unsubsidized.
The formula is Cost of Attendance (determined by the college) - Expected Family Contribution (determined by the information submitted on the FAFSA) - Pell and SEOG grants (if any) - outside scholarships - institutional scholarships/grants - federal work study (may or may not be awarded to the student by the school) = Need. If Need is >0, a subsidized loan up to $3,500 or Need (whichever is less) will be awarded. Then an unsubsidized loan of $5,500 - subsidized loan amount (if any) will be awarded. Need - subsidized - unsubsidized loans = Remaining Need. Parents can apply to borrow a Parent Plus loan or a private loan in any amount up to Remaining Need. (Hopefully my mind is working clearly this morning & that makes sense.)
@thumper1, these apply. How off the npc would be in this case? a rough idea or range would be sufficient 
@kelsmom, great info! thanks a lot. It is very helpful. We donât feel so optimistic to qualify for much or at all, but weâll try and see.
@kelsmomâŠ.just to clarifyâŠ.the maximum direct loan a dependent student can receive freshman year is $5500. If there is financial need, $3500 might be subsidized. The remaining $2000 would not be.
If no need, a $5500 unsubsidized loan would be available.
If these things apply to your family (divorced parents, real estate other than primary residence, self employed or business owners), you need to view the NPC with a lot of caution. How âoffâ would it be? That could depend on the depth of the calculator questions for the college.
Thank you for the heads up, Thumper1.
Unsubsidized loans are available if we donât qualify for need based. Itâs a lot of details in the FA.
@kelsmom is the AMA person here, but yes, I believe the unsubsidized loans are available to your student if you donât qualify for need based aid.
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Yes, unsubsidized loans are available to any student, as long as they file the FAFSA & complete any other requirements for financial aid that the school may request, and as long as the school participates in the federal loan program. You could make $1,000,000/year & your freshman would be eligible for a $5,500 unsubsidized loan.
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@Owl1 How far off the NPCs will be for you depends on a lot of things, including which of those situations apply to you, as well as how in depth the NPC questions are and how an individual school calculates need when those situations are taken into account. Just to give a few examplesâŠfor self-employed parents, some expenses that the IRS allows you to deduct from business income are often added back in for financial aid purposes (e.g. home office deductions, phone, car expenses, SEP IRA retirement contributions), making your income higher than you might expect. The value of some business assets also may be included in the schoolâs calculation of need but may not be accounted for in an NPC. If there are divorced parents, then most CSS Profile schools will want financial info from both parents plus any step-parents, and you may or may not have accurate info for all partiesâ income/assets to enter into the NPC. Ownership of real estate beyond the primary home like vacation homes, rental properties, land, farm, etc. can be tricky because many schools will assume you can sell or access equity in that asset to pay for college, even if that isnât a realistic option.
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@kelsmom, very helpful info. Thank you! when do unsubsidized loans start to accrue interest? when loans are granted or when the student graduates? whatâs the % rate?
When do we know if we get need-based FA or not ? when my kid gets accepted by a college or after I finalize the fafsa? or both?
Classicalsaxmom, thanks for the info. The NPCs I have tried are not that specific so I guess it doesnât help much at this point.
When they are disbursed, they start earning interest.
The interest rate changes from year to yearâŠso what it is this year might not be what it is next year.
@thumper1 hmm⊠with the interest accruing when disbursed, these loans will be expensiveâŠ
Iâm kind of answering my own question. Iâm guessing every college offers different FA (need-based, or loans, or âŠetc.)
We paid the interest annually for our kids. Sort of us subsidizing the loan.
Yes, financial aid awards vary from college to college.
The federally funded Direct Loan is the same for everyoneâŠmaximum $5500 for freshmen dependent students.
Awards funded by the colleges are what vary. These include grants, and even the work study amount if your kid qualifies.
Thumper1, nice of u helping your kids.
Thank you for all the helpful info.