<p>If a school-based loan is offered as part of a financial aid package at a need-based school, are we allowed to reject that loan offer and pay the difference with say, funds borrowed from a grandparent?</p>
<p>Thanks</p>
<p>Yes. You don't have to accept either loans or work-study if you don't want to.</p>
<p>But recall that if it's a gift from a grandparent to pay for college, it needs to be reported on the FAFSA and Profile. Loan is a different matter, I'd think--</p>
<p>Also-- be careful not to have the funds from grandma sitting in a student's account when you complete the financial aid forms (say, for next year), or it will be treated as an asset that will raise your EFC.</p>
<p>Yea, I'm not necessarily talking about grandparents' money...basically anything under the radar (working as a tutor for cash, parents having extra unreported income, etc., lol)</p>
<p>won't the colleges ask where you got the money or no?</p>
<p>i mean, technically, can't you take out the loans and pay them all back in one installment after you graduate? if you have a government subsidized loan, you don't even have to pay interest</p>
<p>Yeah, you could do that, I suppose. It would be called tax evasion and fraud, but you could do it.</p>
<p>If you have extra income or cash on hand you need to report it; concealing it is fraud. </p>
<p>If you have someone who is not legally obligated to fund your college -- like a grandparent -- who wants to help out but also wants to maximize resources - it is NOT fraudulent to take out subsidized loans and then pay them off in full at the end of college. It is perfectly legal to accellerate payment on a loan to avoid interest charges, and depending on my finances at the time, I will probably pay off my daughter's student loans for her when she graduates, though I have not promised that to her. That really is simply one option you retain as a borrower. Keep in mind that you do pay a loan origination fee at the outset, so even a subsidized student loan is not entirely without added costs.</p>
<p>Ok, we got our ghastly EFC. If my motherinlaw wants to loan money to my husband "for your expenses" with the understanding that it will be deducted from a future inheritance, then are we doing anything unsavory? Will the college care? We were vastly relieved, but now I'm worried that we may be creating a new problem.</p>
<p>I was under the impression that you can pay your EFC any way you want -- loans, extra work, savings or funds from relatives.</p>
<p>Well, I decided to ask the college financial aid department directly. I'd rather find out their opinion on the front end than find out later we made a choice without understanding all the ramifications. I'll post what I learn.</p>
<p>I don't see why the school would care where you are borrowing the money from. If I had relatives with that sort of money(which i don't) and they were willing to loan the money I would see it as an option. But there is that other untaxed income schedule on FAFSA - don't know if you would have to report it there. Maybe you would have to have it all set up properly so that you can prove it is a loan - maybe pay some interest. I would be interested to hear what you find out Olymom.</p>
<p>Loan proceeds aren't income- and wouldn't be reported on the FAFSA schedule. They would show as an asset if they were sitting in an account before being used to pay the EFC college expenses.</p>
<p>I was under the impression that you can pay your EFC any way you want -- loans, extra work, savings or funds from relatives.</p>
<p>true if it is a loan
but if it is money that is available for tuition- not a loan- then the money is added to available resources which will increase EFC.</p>
<p>I have heard however- that if 529s? are purchased by grandparents then that doesn't count against EFC?</p>
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I have heard however- that if 529s? are purchased by grandparents then that doesn't count against EFC?
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<p>I have read that too. Sounds like a loophole that will probably be closed once they realise it is there!!</p>