My daughter’s financial aid award included a $3,500 subsidized loan and a $2,000 unsubsidized loan.
She received $2,500 in outside scholarships which we reported to the school.
So if I understand this correctly, since the scholarships reduce our need the subsidized loan will now only be $1,000?
And she can still borrow $4,500 as unsubsidized or only up to the COA?
The school also wanted her to accept or decline the loans.
Since we have the scholarships we don’t need the loans, at least not for this semester, so we declined them.
If we would for some unforeseen reason need them, could we still take the full amount for this year or would it only be for a semester and would both loans be available to us or just the unsubsidized?
You are correct, the need based subsidized loan would need to be reduced to meet need, and the unsubsidized loan would be able to be increased to $4,500 to compensate for the decrease. You would be able to accept the full amount of the loans later on in the school year if needed.
Hmm I think it depends on the school…I’ve had outside scholarships & the subsidized amount never changed. You should report the award and see what happens. If the subsidized loans are still there, fine. If they’re not, you can talk to them about keeping them.
It depends on the overall cost of attendance, the family EFC, and then the remaining need. If the scholarship reported reduces the need to where there is a negative overall unmet need - this is when aid starts to be reduced. Typically schools reduce work study/loans first, and then they move on to grants if needed. If the subsidized loans are reduced, the school has to make those changes - and there isn’t anything one can do to go about keeping the funding unless a work study award was reduced in its place per family request (for example, if the student even had this award to begin with).
The COA is about $32,500, there is a tuition scholarship of $18,000, a state grant of $1,000 and EFC is $10,000.
So the unmet need would be $3,500 which is why we qualified for the subsidized loan I think. We were not offered work study. Now with the outside scholarships our need went down to $1,000.
I just wanted to make sure we could stil use the loans if we needed them.
@Madison85, I am trying to keep loans to a minimum for my D for undergrad because she will have to take out grad and grad plus loans for year 5 and 6 (pharmacy school) since her tuition scholarship ends after the fourth year.
But I guess you are right in that subsidized loans are preferable. No interest accrues while they are in school, even grad school? And then is the interest rate the same as the unsubsidized loan?
@mommdc There are no subsidized federal loans for pharmacy school. I wish I had known that. Take the subsidized loans now - no interest accrues until 6 months after she graduates with her Pharm.D. degree.
I think I’m looking at this the wrong way. Trying to avoid taking out loans now, but then later she will have to take out loans with less favorable terms. So I should just take out the sub loan and bank the money until later? Thanks for the advice, Madison.
You can borrow the loan later in the year … since you did ask, I thought I should answer that question.
Health Profession Student Loans are subsidized, but you have to realize that you are not guaranteed to be awarded a HPL the way you are a subsidized loan. The school has a limited amount of HPSL funding, and not everyone will get one or get the maximum allowed by program guidelines.
My kid got a subsidized institutional HPL of $4000 (which was the max) the first post-undergrad year. But even though our income did not increase, she was not offered it in the subsequent years (apparently we were on the border). With hindsight, wished our kid had taken the undergrad subsidized loans and put them in the 529.