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

Paying for College
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That's true, but the school must follow the formula above. The COA figure is very fuzzy -- a school can create eligibility by including a generous travel allowance or estimation of the cost of books and incidentals. It can vary from one student to another because of issues of housing costs (on or off campus?) and these various allowances. But in the end there is a specific figure they are working from.</p>

<p>Similarly, the school can create eligibility by the exercise of professional judgment allowing it to make corrections to the FAFSA in order to qualify the student for more aid. That is what my daughter's college did her first year -- they used information from my tax return to increase the deductions on one of the FAFSA worksheets, thereby qualifying her for a Pell grant. I would not have known from reading FAFSA instructions that I could do that -- but it was a fuzzy area that falls under the professional judgment rules. But if the college makes corrections to the FAFSA, the student is notified and the new EFC is readily ascertained.


I think you correctly understand Northeastmom's question, but my answer is that schools don't "offer" Stafford loans, they just certify eligibility. The money comes from either a private lender or the federal government -- it is not the school's to dispense. (The same is true of Pell Grants, but not true of Perkins loans or work study, which are distributed by the school from a limited lump-sum budgetary allocation). </p>

<p>It would be nice if college financial aid award letters all looked the same and clearly set out what aid the student was eligible for, but they don't. They all look very different and I think some are very misleading or confusing.</p>

<p>I am starting to think that in Northeastmom's case, her son did not end up attending the school that did not "offer" the Stafford loan, and so she never made inquiry into the meaning of the award letter she received. If she saw a document that showed $5000 of unmet need, that in itself might have been documentation of Stafford eligibility -- but if it didn't expressly list the loan, she may have misinterpreted it, thinking that meant her son could not get a subsidized loan. </p>

<p>I can surmise a variety of reasons that might not be listed. For one thing, there may be a prospect of other funds coming to the student through the college's own merit award system or outside scholarships that would reduce eligibility. The financial aid letters issued with the admissions decision are generally labeled as tentative or estimated; perhaps the out-of-state college did not list the Stafford loan in the initial award letter because it's practice was to first inquire as to such outside scholarships, at least when the need amount is below a certain threshold. </p>

<p>But the point is... if there was unmet need, then the student was eligible for a Stafford loan up to the maximum amount allowed by law, or the total amount of unmet need, whichever was less. If Northeastmom had a piece of paper from the college showing unmet need, that was all her son needed to qualify for a subsidized Stafford loan, whether or not he chose to apply via the school or an outside lender. The college certifies remaining need; remaining need is what determines subsidized Stafford eligibility.</p>

<p>The same is true of PLUS loans, whether or not they are listed in the financial aid award -- though those are not need-based. But the point is, for a parent to get a PLUS loan, the college must certify eligibility factors (enrollment, COA, amount of financial aid) to the lender -- the only difference is that for the PLUS loan the EFC is not subtracted out of the formula.</p>