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

Paying for College
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<p>Calmom, I know with my son's school he has to accept or decline his financial award. This year it was not a problem. He was offered the full amount of Stafford loans allowed as a subsidized loan. Lets say that the school offered him a partial subsidized Stafford, or only a unsubsidized Stafford in their award, but need was not met bc the COA was lets say, 8k more than our family's EFC leaving a gap and nothing else was offered. How would he handle accepting/declining? </p>

<p>
[quote]
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.

[/quote]
</p>

<p>My son received an award letter from an OOS public that had a COA of 4k more than the COA at another OOS public that he currently attends (which offered a partial subsidized Stafford last year). The financial aid offer at the more expensive school only offered a non-subsidized Stafford loan and told us that we may apply for a parent plus loan for the full COA of the school for that year. I thought that we were not offered the Subsidized Stafford bc my son would have been an OOS student at that public school. I never considered that they changed our Fafsa in some way.</p>

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<p>calmom: I am always amazed at your knowledge and clarity.</p>

<p>Just as a minor point: I have two children at "need blind" LAC's. Both offered grant money, and one subsidized Stafford loan only while the other offered Perkins loan only.</p>

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<p>northeastmom...</p>

<p>
[quote]
The financial aid offer at the more expensive school only offered a non-subsidized Stafford loan

[/quote]
</p>

<p>I can't imagine it has anything to do with in/out of state...Could it be, that the more expensive school uses a different methodology to determine "need"? It's obvious that some schools are several thousand off the FAFSA EFC figure when packaging their FA offer (or like calmom mentioned in rare cases maybe they correct or alter the FASFA). </p>

<p>Nevertheless, this whole thread talks around the cases where the school does not offer Subsidized (or even unsubsidized) for whatever reason, and by the FAFSA guidelines you still might be eligible...is there a way a parent can self-initiate (or increase) the federal loan directly through the lender?</p>

<p>It seems, you can, or at least it's worth the try. </p>

<p>I'm struggling - as a single mom - to scrape together the EFC as it is...and I don't have good credit for the expensive loans. So if a school's prefered methodology leaves another $5-10,000 'gap' on top of EFC, which might well have been met with federal loans, it's heartwrenching - inspite of a significant grant, my D still can't go to that school.</p>

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<p>What I don't understand is how a School can just set a Limit to how much every student can take. Such at My brothers school, they give you a extra $50 past the tuition for all other expenses(books, traveling). $50 barely covers it and now he is forced to take a job at 30+ hours a week to make up the rest. We live in NY state and he gets Pell, Tap and a maxed Sub staff. Wanted to take a Perkins but was denied. Went to take a unsubsidized Stafford loan and was denied because his meet need was well already reached.</p>

<p>My school is the same, a student cant afford everything unless they take out of pocket money. Even though the school forces freshmen to have meal plans and insurance, you cant even use loans for that stuff, due to the cap.</p>

<p>Real stupid if ya ask me.</p>

25

<p>


If the Perkins-only school met the full FAFSA-based need with grants, then that simply is a very generous financial aid offer. The interest on a Perkins loan is less than Stafford, so it's a good deal if a college starts with the Perkins and doesn't require a Stafford. </p>

<p>If the Perkins-only school did NOT meet the full FAFSA-based need with grants, then your son would have been eligible to apply for a Stafford loan. Again -- you apply to the lender, not to the school. </p>

<p>I'm getting a sense that people are thinking of the school's financial aid award as "all you can get". However, that is not what it is, it is a statement of, "what the school will do to meet need". Since a Stafford loan does not come from the school, if the school is not purporting to meet full need, it doesn't matter whether they "offer" it or not. All that matters is that the student is eligible. If the school is meeting need, then it is possible that the total amount of grants, other loans & work study will render the student *in*eligible for the Stafford, as they will no longer have unmet need. </p>

<p>


Stafford loans are not given to parents, so parents have nothing to do with the process. The student simply writes down the amount they want to borrow when filling out the forms with the lender, or enters the number they want if the loan application is done online. If the school has offered a Stafford in an amount less than the total, the school will usually specify one or more "preferred" lenders and provide the necessary paperwork or web site link. If the student has not been offered the Stafford, then the student could go directly to the web site of a Stafford lender and apply. You could do that with any lender.</p>

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<p>Once again, Calmom, thank you very much.</p>

<p>
[quote]
I can't imagine it has anything to do with in/out of state...Could it be, that the more expensive school uses a different methodology to determine "need"?

[/quote]
</p>

<p>ahoo2u, no, both schools I am comparing are OOS public schools. They only use the fafsa.</p>

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<p>Only one problem, Stafford Loans must be certified by the school. If the school has determined that the student is not eligible to receive Stafford Loans, they will not certify it. Therefore, self-initiating the Stafford Loan directly through the lender will not work. Also most Staford Loan lenders will direct you to the school when you go to their website to apply for the Stafford Loan, because it is a loan which is dependent upon your FAFSA application. Lenders do not have access to the FAFSA application. They cannot tell whether you have been pulled for verification and refused to supply the information. They are not permitted to just provide Stafford Loans directly to students. Even if you manage to find a lender who is willing to break the rules and disperse a Stafford Loan without the school's aproval, you could find yourself in a world of hurt. This would be considered additional (outside) funding which could reduce other aid you have been awarded, thus making you have to come up with more funding out of pocket.</p>

<p>Just went to EdAmerica's website and click their link to "Apply for Stafford Loans." If took me to the Master Promissory Note, which does not have a spot to request a specific dollar amount. Found the same thing with several other lenders, including many warning to contact my school for application procedures for the Stafford Loan.</p>

<p>Recently, we had a student seek outside funding through educational loans (private). She had chosen an unreliable lender who dispersed without schol certification. When the lender sent the funds in to the school, we had to reduce her Stafford Loans because she was in an overaward status. Her attempt to increase her financial aid funding actually kept her aid at the precise same level.</p>

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<p>NikkiiL, Thank you for responding to this thread. My son had a situation where he applied to an OOS public institution. COA was more than our EFC. This is a fafsa only school. We completed our fafsa, and my son was not offered any financial aid other than an unsubsidized Stafford, and an invitation to apply for parent plus loans. Another OOS public with a COA of 4,000 less than the first OOS public awarded my son a partial subsidized loan. Why would my kid be denied a Subsidized Stafford at the more expensive school (COA was 4k more)?</p>

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<p>Without having the ability to review his financial aid records at both institutions, I can only speculate. The only idea within reason, which comes to mind, is that maybe the first school had a "no loan" policy?? Other than that, I really don't a any clue how they couldn't have offered either sub or unsub to your child. Even if they use an institutional formula, one woulod think that your child would have at least qualified for some unsubsidized funding, in addition to the Parent PLUS loan.</p>

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<p>NikkiiL, thanks. He did qualify for unsubsidized funding (unsubsidized Stafford only). Can a public school deny subsidized Staffords to OOS students who are otherwise eligible? That was my original thought. Frankly, from the packages that I have seen from the various schools that my son was accepted to last year, I really felt that the subsidized vs. unsubsidized Staffords vs. partially subsidized were rather arbitrary in how they were determined as to which one my son would receive. This was just a layperson's personal observation, and might be inaccurate.</p>

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<p>What is the criterion that determines whether a student "qualifies" for a subsidized Stafford loan? Or an unsubsidized one, for that matter. Is this solely the school's determination, or is it a federal guideline?</p>

<p>Thank you all so much for this discussion.</p>

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<p>^skyhook, excellent question. I have been asking it for about a year now, and I still am not sure about the correct answer.</p>

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<p>I believe anyone can get a Stafford loan- but for instance if the school expenses are $20,000 and your EFC is $10,000- you would be eligible for subsidized Stafford loan.
If your EFC is $25,000 and your expenses are $20,000, you would not.</p>

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<p>Ek, I understand this. What I don't understand are other situations. Here was my son's most straight forward example. School A was an OOS public. Our efc was substantially less than COA. School B had a COA that was 4k less than School A. School B was also an OOS public. School B offered a partially subsidized Stafford, and School A offered only an unsubsidized Stafford and no other types of financial aid was offered,not even WS. I cannot understand why we did not qualify for a subsidized Stafford at school A. There were other examples of this, but where WS and grants enter into the equation at the private schools, it gets more murky and I would have to get out all of the financial award letters to get into specifics.</p>

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<p>Northeast Mom--Are you asking this--</p>

<p>If a student has remaining need (unmet COA over EFC, after all other financial aid is factored in) why would any school NOT offer the max allowable subsidized Stafford loan? </p>

<p>Is there some reason why a school would hold back offering a student the maximum subsidized Stafford loan?</p>

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<p>I guess that is the question. In the example above, it is very clear cut bc no other aid was offered, and there was unmet need at school A.</p>

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<p>


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>

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<p>


Just to be clear - I think you either misunderstood the award letter from the school, or there was information that was not clearly stated in the award letter that changes the equation. If the letter showed "unmet need" then your son was eligible for a Stafford loan in that amount. </p>

<p>If you have the financial aid letter available maybe you can pull it out again and look at the exact wording and post everything --because I have a strong feeling that the issue is that the award letter was not clearly understood at the time. This is understandable, because the letters can be very confusing. You may find this web site helpful (or scary) if you play around with the option to "decode" sample financial aid offers:
<a href="http://www.financialaidletter.com/%5B/url%5D"&gt;http://www.financialaidletter.com/&lt;/a&gt;&lt;/p>

<p>The problem with the example you are posing is that it doesn't sound like you ever contacted the college to request an explanation. That makes sense if your son preferred attending a different college -- but it does leave open the possibility that the award didn't mean what it seemed to say.</p>

<p>My daughter's financial aid award letter from the college she now attends didn't mean what it said, either. In my daughter's case, there was one additional contingency: at the time of applying we didn't know whether or not her older brother would be returning to college the following year. We filled out the FAFSA as if he would attend school -- but we didn't have the name of a college to provide. My daughter's college sent a financial aid letter that had the federal aid programs reflected based on the assumption that the sibling would be in college, but had the college's own grant calculated based on the assumption that he would not be in school. So I called the college to ask for clarification, and learned that if my son did in fact enroll full time in college, then my daughter's grant would be increased. </p>

<p>Obviously, it was a good thing that I made that call because there was nothing in that letter that would have tipped me off that there was a possibility of a larger grant. Quite the opposite: the letter actually said that I needed to provide proof of my son's college attendance in order to keep the award offered. </p>

<p>I think that most college aid financial aid officers are trying to do their best to comply with the federal regulations as well as their college's own rules and policies. I doubt that any college would try to cheat a student out of eligibility for a subsidized loan that he is eligible for. So I really do think that when it comes down it, the issue in your situation is that there was probably a misunderstanding of a confusing and poorly labeled letter. Somewhere in the mix there is an explanation that simply wasn't spelled out in the letter you received.</p>

<p>Or else the college made a mistake, or failed to follow the federal regulations. If they did that --then you have simply presented an example of a college messing up -- it would be kind of like debating whether the speed limit along a road is really 55 mph like the sign says when you keep seeing cars zooming by going 80. The fact that those cars are in fact exceeding the speed limit won't change the fact that the legal limit is something different.</p>

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<p>Calmom, You have been so generous with your time, and you have inspired me to dig deep into my file cabinet. I found the award letter. First let me say that I did not investigate further bc my kid chose another school over this one, and since he was offered nada, there was nothing to investigate.</p>

<p>There was 15 page booklet, and further website links for more information. Frankly, I did not see anything in the booklet that would have answered my questions. The award letter reads as follows: "Financial Aid Notification"
Your signature below indicates that you accept all offers, except those you decline by circling "D" in the fall and spring columns. The Bursar's Office will credit financial aid funds to your university account for tuition, mandatory fees, room and board (if you live on campus). They will also aid funds toward other charges, ie: parking, unless you circle "no".</p>

<p>Please return withing 14 days. Academic year total: 28,610.00. Federal Direct Unsubsidized Loan: 1312 for the fall, and 1313 for the spring, total=2625.00
Optional Parent Loan Maximum: 12,992 fall, and 12,993 spring.</p>

<p>Then there are additional "messages":</p>

<p>Plus- The parent loan eligibility shown is the maximum amount your parent may borrow. If your parent wishes to apply, From D in the notification guide must be completed and returned. Then it gives a website link to this form.</p>

<p>This offer is based upon on-campus or off-campus housing status.</p>

<p>This offer assumes that you will attend as a full time student. If you will attend less than full time return form C from the notification guide (again a link). </p>

<p>That was it, plain and simple.</p>

<p>Just editing to add that our EFC was quite a bit less than the 28,610.</p>

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<p>I don't see any indication from what you posted that the school determined "need" at all. For all you know that school never received your son's SAR or some other info they deemed critical for the financial aid award. </p>

<p>Smaller colleges are pretty good about contacting you to ask for missing information, but that's not the case with larger universities. When my daughter was accepted at UC Berkeley the financial aid awards were online and there was nothing there for her -- the online system indicated that no SAR had been received. I know for certain that the FAFSA was submitted -- the other UC campuses had theirs that were submitted at the same time -- but it wasn't there. I never bothered calling to ask - but if my daughter had wanted to attend Berkeley at that point I would have emailed & faxed the SAR immediately and been on the phone trying to get a person to give me an award based on the FAFSA EFC. </p>

<p>I'm not trying to challenge you on this -- I certainly didn't waste time trying to deal with financial aid at colleges that were low on our preference list at the end of the process -- but my point is that you can't assume that an award was premised on full information if you didn't ask. I think my daughter's college is wonderful when it comes to financial aid, but I got my daughter's grant for this year increased by about $600 after I called them to discuss the award and it turned out that they hadn't considered a certain fact about our financial situation. The conversation went like this: </p>

<p>*Me: What about X expense?
Rep: You had X expense? Well, in that case we would increase your grant.
Me: I know the Profile asked about X?
Rep: Yes, I see it here, you wrote down you had X in the Profile, but we don't lok at that.
Me: Well, what do you look at?<br>
Rep: You need to send the specific documentation that shows X.
Me: OK, I'll do that. *</p>

<p>Anyway, the point is that you have no way of knowing whether the document you were sent was premised on full and accurate information. College financial aid offices make mistakes all the time.</p>

<p>It doesn't really matter for you. I hope that the college your son chose is one that he preferred in any case. </p>

<p>I just think its important for others who are reading this thread to know that these awards can be questioned and that there is a formula that has to be applied. If there is unmet need, then the student is eligible for a Stafford loan no matter how obtuse or confusing the financial aid letter might be. But there may be some red tape to deal with to get it all straightened out, depending on circumstances.</p>