Stafford Loans - Need based FA - are they an entitlement or an AWARD?

Paying for College
1

<p>We wait for the FA offer to come and accept what is offered like we've drawn a number out of a hat. For scholarships and grants this is understandable. Grants & merit monies are rewards and enticement for good students to attend. </p>

<p>But Federal need based aid - am I totally off limits to think it should be a more of an entitlement than an award?</p>

<p>Yet schools offer FA packages of $0 or less in loans than the student is eligible for by FASFA all the time
.<br>
Why do schools AWARD federal need based loans as part of the FA package. Why doesn’t an eligible student just request the amount they are eligible for?</p>

2

<p>Because eligibility is based on more than just the completion of your Federal Application (FAFSA). Loans are typically the last piece of the FA pakage and therefore students may not qualify for the federal maximums alloted to their grade level. I actually have several students who did not qualify to receive any Stafford Loans as a part of their financial aid package because their scholarships and grants covered their entire cost of attendance (not just cost of tuition.) If we had award them loan funds, the student would have been over awarded, and there could have been trouble for both the student and the school.</p>

<p>You may look at your information and determine you qualify for need based loans, but that doesn't mean you are entitled to them. There is so much more that goes into those determinations.</p>

<p>Stafford Loans, need based or otherwise, have never been an entitlement.</p>

3

<p>My concern isn't with overawarding

[quote]
...their scholarships and grants covered their entire cost of attendance...If we had award them loan funds, the student would have been over awarded, and there could have been trouble for both the student and the school.

[/quote]
</p>

<p>*My issue is with underawarding *</p>

<p>two schools have the same cost of attendance. With everything else the same one school offers a freshman $3,500 subsidized loan, the second school offeres same student only $2,000. Why?</p>

<p>
[quote]
You may look at your information and determine you qualify for need based loans, but that doesn't mean you are entitled to them. There is so much more that goes into those determinations.

[/quote]
</p>

<p>... what goes into the determination?</p>

<p>Thankfully because professionals like NikkiiL and others are giving some insights - I am beginning to see that there is more involved than individual packages...where you do the math and come up with a magic number. </p>

<p>I may be wrong but ...It seems that FA officers must also regard institutional policies and government 'limits' and 'restrictions' so as to treat the recipient pool with equality on one side, and avoid over awarding any student with other resources on the other side. </p>

<p>But it's so frustrating - institutional FA awarding policies, procedures, are very hidden from public awareness. We can read the CC posts and see some patterns of specific schools</p>

4

<p>Q: two schools have the same cost of attendance. With everything else the same one school offers a freshman $3,500 subsidized loan, the second school offeres same student only $2,000. Why?</p>

<p>A: In all honesty, I can think of no reason other than human error, for two schools with exactly the same cost of attendance, other aid, and FAFSA/Profile information to offer two different loan amounts. As I stated, I have seen the loan amounts reduced from the federal maximum to prevent the student from exceeding the COA, but nothing in the manner in which your example describes.</p>

<p>Q: ... what goes into the determination?</p>

<p>A: This can vary by school. At my institution, the factors which go into determining a student's eligibility are:
- Living allowance (COA)
- Estimated cost of tuition (COA)
- Estimated cost of books (COA)
- Loan costs (such as origination fee) {COA}</p>

<ul>
<li><pre><code>Other aid awarded/earned (Institution aid, Pell Grant, FSEOG, Work Study, Employer Reimbursement, Outside scholarships, discounts {such as military discount, Perkins Loan}) subtracted from COA
</code></pre></li>
<li><pre><code>EFC subtracted from total of COA minus Other aid
</code></pre></li>
<li><pre><code>Veteran's Benefits subtracted from total of COA minus Other Aid minus EFC
</code></pre></li>
</ul>

<p>This product then determines the student's actual need (which can be entirely different from their EFC figure)which determines how much, if any, Stafford Loans are available for the student.</p>

<p>In fact, I recently award a student who had full Pell grant, Military discount, 100% employee reimbursement (for tuition only), and veteran's benefits. He didn't qualify for any subsidized loans, only unsubsidized stafford loans. I was sure I was doing something wrong...a student with a zero EFC ineligible for subsidized loans was bizarre, so I recalculated several times to make sure I was doing it correctly. I even had two of my co-workers review the information to be sure if was right. It was! </p>

<p>Never be afraid to ask your institution for the figures they use to determine COA and need, they should be able to provide this information quite easily.</p>

5

<p>If the student is eligible for a Stafford loan, then he/she can take out the maximum amount allowed by law whether or not that has been included in the financial aid package. If there is a gap between FAFSA EFC and the amount that the college wants the family to pay, the student can opt to take the Stafford loan to fill that gap.</p>

<p>Perkins loans are administered through the schools so a student will not be able to get those unless offered by the school.</p>

<p>Here's an example -- let's say the FAFSA EFC is $5000, but the student attends a private college using the Profile which adds in the parents' home equity, and calculates family contribution as $12,000. This college also has a policy of no first year loans, so they provide a grant for the full "need" (as they define it) -- leaving the family to pay $12,000. This leaves a $7000 "gap" between FAFSA EFC & the actual expected contribution.</p>

<p>In this case, the student can still opt for a $3500 subsidized Stafford loan for the first year, because in the eyes of the federal government, there is $7000 of unmet need.</p>

6

<p>calmom ... your hypothetical case is a good example of the kind of situation I am distressed about....where the student and family feel there is still unmet need...and either a lesser amount or no federal loan is in the FA package.</p>

<p>
[quote]
If the student is eligible for a Stafford loan, then he/she can take out the maximum amount allowed by law whether or not that has been included in the financial aid package.

[/quote]
</p>

<p>This is a really REALLY ** REALLY ** difficult thing to do. You still have to "Plead your case" with the financial aid officer. They are the gate-keepers.</p>

<p>I guess I used the word ** entitlement ** too boldly, when I really meant the abiltiy to "opt for" or "request" a subsidized or unsubsidezed loan when one is convinced the student is eligible for it. </p>

<p>My experience in proving elibility for sub & unsub loans was ugly. Four phone calls, 1 fax, 1 appeal letter, 4 e-mails. I tried and tried to get the information that NikkilL refers to: </p>

<p>
[quote]
Never be afraid to ask your institution for the figures they use to determine COA and need, they should be able to provide this information quite easily

[/quote]
</p>

<p>...even with a request to the director of FA couldn't get the info, but D eventually was offered another $1000 sub and $4000 unsub</p>

<p>But I don't feel vindicated, I feel humiliated...like I had to fight and beg for what I believed the student was "eligible" for. </p>

<p>I fear that I was too "pushy" too early and someone got ****ed off or I said "entitlement" and incited resistance. But personalites shouldn't be involved so human error was more likely the beginning of it all.</p>

<p>So I appreciate the posts above and maybe it will help another parent or student approach their FA officers more informed about the process, because sometimes an amount is NOT in the FA package when you are 'eligible ' for it.</p>

7

<p>I'm not sure what problems you are running into. You don't have to go through the school for a Stafford loan. FAFSA eligibility is determined by the FAFSA EFC -- the COA figures from the school are generally something stated in the financial aid award. </p>

<p>My daughter's financial aid award specified a lower than maximum Stafford loan and she simply requested the full legal amount when filling out the form with the lender. </p>

<p>It isn't something that has to be written into the financial aid award -- again -- you just work with the lender. </p>

<p>I just don't see how there can be anything in dispute. From your statement, "the student and family feel there is still unmet need" - it seems that perhaps your situation is that you are unhappy with the FAFSA EFC, not that it hasn't been met.</p>

8

<p>
[quote]
My daughter's financial aid award specified a lower than maximum Stafford loan and she simply requested the full legal amount when filling out the form with the lender.

[/quote]
</p>

<p>Really? This is something that I have never understood. My son had two OOS public school financial aid packages. One school's COA was $4,000 more than the other school's COA. The school with a COA that was 4k more, did not offer any aid other than unsubsidized Stafford loans, and let us know that we may apply for plus loans. The less expensive OOS public offered a partial subsidized Stafford loan. How does one know how much of the Stafford loan may be taken as subsidized? I still don't understand how this determined.</p>

<p>Calmom, If one's EFC is 25,000 and the COA is 30,000, and no financial aid is offered other than unsubsidized Stafford Loans, does that mean that a junior or senior may take 5,000 out of the 5500 allowed to be borrowed as a subsidized Stafford (regardless of whether the school offers it as subsidized or unsubsidized)?</p>

9

<p>my son was only offered $2400 perkins loan. His school (NYU) said that is the maximum they offer everyone (at least as freshman, I'm not sure about upperclass). I think they are just trying to get some money out to as many eligible students as possible. IF they gave the max of 4000, then less kids would be offered this aid.</p>

10

<p>** If this is true then I and many other parents are not aware of FA options which are open to them **

[quote]
My daughter's financial aid award specified a lower than maximum Stafford loan and she simply requested the full legal amount when filling out the form with the lender. </p>

<p>It isn't something that has to be written into the financial aid award -- again -- you just work with the lender.

[/quote]
</p>

<p>It never even occured to me that I could contact the lender without the school's prior authorization. The whole idea that I could initiate the requested amount with the lender FIRST is a revelation. </p>

<p>Example above...if someone like sueinphilly's son has only been offered the $2400 Perkins (but no Stafford) and he still has unmet need....could she contact a PA Stafford Subsidized Lender (like AES), request $3500 (freshman) or $4500 (sophmore) , fill in NYU as school....even if Stafford Subsidized isn't offered in the original FA package? and then what happens? Are we inferring that As long as the requested loan meets Federal guidelines the school can't refuse the FA? *This is too good to be true * </p>

<p>This gives students some wiggle room before turning down one school over another similar COA school....and more importantly - what hurts many stuents, maybe some families could self-initiate maximizing their government subsidized and unsubsidized options - and save some big $$ by taking out lesser amounts in Plus or even worse - private/commercial signature loans with big origination fees and high rates.</p>

11

<p>^^ I really want to know the answer to post #10!</p>

12

<p>I was unclear, my son did get the full stafford of $3500, but only $2400 for perkins. NYU would not give him the maximum perkins amount because they are trying to stretch their federal $$ to as many students a possible. </p>

<p>They did try to take the perkins away completely and make his WS amount $3300. After a polite call to the FA office, his WS was reduced to 900 and the Perkins was reinstated for $2400. We need the guaranteed money :-)</p>

13

<p>I figured as much. Doesn't the full subsidized Stafford need to offered before they offer the Perkins? I can see why anyone but the most wealthy would need guarenteed money for NYU. I want to see how many people can still afford to attend as these schools hit 60K per year! Where does it end? I guess there is no end to the rich that can fill these seats....sigh.....</p>

14

<p>Perhaps the school of the person whose daughter wasn't give the full stafford loan (initially) felt that giving the full amt would provide her with too much 'need based aid'. </p>

<p>NYU tried that with me. At first it was 3500 stafford, 2400 perkins and 3300 WS. then I got a letter saying we had too much 'need based aid' (is there such a thing?) and they were shifting 2400 into the "parental pay column". They tried to take the 2400 from the Perkins, but I changed that to reduce the WS. </p>

<p>MY EFC was 12k and I'll be paying every penny (and then some) of that amount this year.</p>

15

<p>northeastmom, my son was given a 30K scholarship from NYU. When we got that letter, I felt like we had hit the college jackpot. And yes, the COA is nearly 50K. And he's going to be in one of the 'cheaper' rooms - 8600 per year. </p>

<p>In this case it will be the mom eating ramen and macaroni, while the kid enjoys the $3330+ meal plan (and that's not the most expensive one). </p>

<p>Hope my '91 honda keeps humming :-)</p>

<p>I'm not wealthy, my agi was 52K for 2006, I live way way way below my means for many years. OK, say, I"M CHEAP</p>

16

<p>
[quote]
Doesn't the full subsidized Stafford need to offered before they offer the Perkins?

[/quote]

I don't think so. My daughter's financial aid offer included a full Perkins loan of $4,000 and a subsidised Stafford loan of @ $1900. Then when she got more merit scholarship money the subsidised Stafford went away and the Perkins was reduced by half. Then we decided to convert her WS for this semester to a loan as she has an outside job and now a smaller subsidised Stafford is back in the package.</p>

17

<p>swimcatsmom, interesting. This whole thing is very much a mystery to me, and I wish this were more transparent to those who are paying most of the bill.</p>

<p>sueinphilly, from one cheap mom to another (your words, not mine;)) CONGRATULATIONS!!! Yes, he hit the jackpot, but he must be just an exceptional student. You should be one proud mom! I can now see why NYU works for your family.</p>

<p>Can someone clarify post # 10 for me, and others who are very interested in this? If it can be done, why are schools awarding less than the maximum Subsidized Stafford loans if need has not been met through grants, WS, etc?</p>

18

<p>
[quote]
This whole thing is very much a mystery to me, and I wish this were more transparent

[/quote]

I agree it is all a bit of a mystery. We have a very low EFC this year for various reasons so had hoped she would get the SEOG rather than some of the loans as SEOG is awarded to those with the lowest EFCs. She didn't get it and I was surprised. I wondered if it was because she got some pretty good merit awards so they felt her 'need' was not as high despite the low EFC. I like the way Pell grants work - your EFC is 'xxxx' so you get 'zzzz' - that I can understand! </p>

<p>.</p>

19

<p>*To sueinphilly *-- Perkins loans are different -they are subsidized funds lent BY the school, so the school has total discretion as to how to allocate those funds. Here is how Perkins works:

[quote]
The U.S. Department of Education provides a programmed amount of funding to the school. In turn, the school determines which students have the greatest need. The school combines federal funds with some of its own funds for loans to qualifying students.

[/quote]
See:
<a href="http://www.salliemae.com/get_student_loan/find_student_loan/undergrad_student_loan/federal_student_loans/perkins_loans/%5B/url%5D"&gt;http://www.salliemae.com/get_student_loan/find_student_loan/undergrad_student_loan/federal_student_loans/perkins_loans/&lt;/a&gt;&lt;/p>

<p>So as to Perkins, you can only get those types of loans from the college. No place else to go.</p>

<p>As to Stafford, you can shop.</p>

<p>*Northeasternmom **asked: *If one's EFC is 25,000 and the COA is 30,000, and no financial aid is offered other than unsubsidized Stafford Loans, does that mean that a junior or senior may take 5,000 out of the 5500 allowed to be borrowed as a subsidized Stafford (regardless of whether the school offers it as subsidized or unsubsidized)? Yes -- but its possible that you may have to work with an outside lender. I find it odd that the college would offer only unsubsidized loans if the student was eligible for subsidized loans -- you do have to keep in mind that the college can change the FAFSA during the financial aid verification process. My son's first college did this by adding in an arbitrary valuation for my "business" (I am a self-employed freelancer who works from home), which they decided was the total amount of my previous years's income-- I didn't understand that until renewal time, when I went in and found that huge number there. I took it out when I filled out the form, but they added it right back in the next year. Obviously that changed the financial aid picture somewhat, because it gave me a phantom "asset" of an extra year's earnings -- but irrelevant to the loan situation in his case because his financial aid package did include the maximum Stafford then allowed.</p>

<p>ahoo27 asked *then what happens? Are we inferring that As long as the requested loan meets Federal guidelines the school can't refuse the FA? * It's a loan - the money doesn't come from the school so there is nothing for the to "refuse". There may be logistical problems working with an outside lender -- you could get bills from the bursar demanding payment because they are unwilling to wait for the loan funds -- but once the loan is dispersed, they are not going to send it back.</p>

<p>The reason that I have this situation with my daughter is that her college tries to limit the amount of indebtedness it requires of their students -- and my daughter came in while the Stafford limits were lower, and the written brochure we got at the time set a ceiling for each year -- so they had already told us in writing a year before that the maximum loan "required" for sophomore year would be $3500, even though the law now allows $4500. It is a CSS Profile school, and I am a divorced, self-employed homeowner -- so there are a lot of dollars the school considers, including ex-hubby's income, that are not part of the FAFSA. So I've got a FAFSA EFC of around $8K and a financial aid award requiring a parental contribution of about $20K -- naturally I insisted that my daughter borrow $4500 rather than $3500. In her case there was no hassle -- the school simply sent a form and asked her to write on it how much she wanted to borrow.</p>

<p>Keep in mind that she could also choose the other way -- she could have decided not to borrow anything. (Let's fantasize and pretend that her daddy suddenly sees the light and decides that he will help pay for college after all, and offers to pay half the total -- we would then be in a very different situation, but it wouldn't effect aid eligibility because the award was already premised on the assumption that the noncustodial parent was supposed to contribute to the mix).</p>

20

<p>Wow, Calmom, thank you for taking the time to respond. This is very helpful.</p>