turning down financial aid

Paying for College
1

<p>S1 recently received an aid offer that included just loans. The fact is that we do not need loans (yet). The website has buttons to "accept" or "not accept" the financial aid offer. We will call the office to be sure we understand the implications of what we are doing, but is there any reason we wouldn't turn down the offer? One consideration is that we would like S1 to have "some skin in the game," so are considering having him sign on for some debt even if we could afford to pay. I was a bit confused because I assumed we would need to take care of applying for loans (if we chose to) on our own, not through the financial aid office. </p>

<p>Additionally, S1 is planning to study abroad either his second or third year at reduced tuition. S2 will start college when S1 is a junior. As I see it, we might be better off financially if S1 studies abroad sophomore year because the following year we would have two in college at full tuition and therefore may qualify for more aid than if S1's tuition were reduced that year. </p>

<p>I guess, in a nutshell, is it better to deplete current college savings early and take loans later, and maybe increase chances of qualifying for aid then, or to take a bit of debt on as we go along in order to have substantial funds available when S2 enters?</p>

2

<p>First of all, you can decline loans now & still borrow later in the year if you decide to do so. Your S will probably just have to fill out a loan revision request form at the school. </p>

<p>If your school is a direct lender, all you have to do is accept the loan online, complete the entrance counseling, and sign an MPN (many schools have the whole process online). You do not choose a lender; this loan is done directly between the school & the federal government. If the school is a FFELP school, the website will most likely tell you how to proceed with selecting a lender.</p>

<p>I would not suggest borrowing earlier than you need it unless the loan offered is a Perkins or a Stafford subsidized loan. Unsubsidized Stafford loans are not smart to borrow in advance of needing - because the 6.8% interest begins immediately. Perkins & sub Stafford do not accumulate interest - interest begins only when loan goes into repayment. </p>

<p>It's hard to say how much depleting savings actually increases the chances of aid. That depends on your personal situation. If you have to pay interest on loans, you might not be ahead of the game by borrowing if you can actually pay. But again, everyone's situation is different.</p>