<p>My daughter will be attending Mizzou next year. They offer in-state tuition if you stay over the summer, work and earn $2000, etc. She will be doing this. However, even with that better tuition, we still cannot afford to fully help her with tuition and living expenses. So, she is taking out student loans. Along with the government loans, she must take out one private loan. The terms are fantastic and it is subsidized so we aren't afraid of the loan. </p>
<p>Here is my question. If she takes out more than she needs from this private loan, so she has the money to pay for next year and the following year, will having this loan money in the bank hurt her chances for financial assistance? In other words, will this loan money, that is targeted to pay for school, cause her FAFSA score to go up and cause Mizzou to ignore her for grants or other non-scholarship aid? It seems so wrong, but we are thinking we need to take out smaller loans each year rather than one big one in order to play this financial aid game. Is my thinking correct?</p>
<p>She didn't qualify for grants this year, so when she is an independent student next year, should we assume she still won't qualify anyway? Just trying to avoid having to go through this loan process and paperwork every year and just do it all at once now.</p>
<p>The loan money, if it is a college loan, does not have to be reported as an asset. It’s smart to keep a “chain of custody” clear for those funds, just so it’s easy to trace. Don’t mix with other assets. It won’t affect her financial aid chances.</p>
<p>But you have to apply each year anyways to see if you qualify for some funds each year. It is possible, not likely, not most of the time but possible enough that I’ve seen it happen a number of times, that an upperclassman qualifies for some funds. My son did get merit money in upper class years, for instance, and sometimes there are merit within aid type funds available. Also if you just missed money that you might have gotten, it’s possible you get it in subsequent years. </p>
<p>So, when you say, “chain of custody”, do you mean we should open another account at a bank (like a savings account or a new checking account) and put any leftover student loan money in that account? Then, when it is time for the FAFSA, she doesn’t report that money at all? Just trying to understand exactly how to go about this. I appreciate the quick response!</p>
<p>You want to make it easy, if asked to verify. Essentially, when you dump the loan proceeds into an account, you have to report the balance in that account on the day FAFSA is completed minus the loan proceeds or lowest balance the account has experienced since you put those funds in there. If you borrow $1000 and there is $100 in the account already, you have, then you have to keep that in mind. If the balance ever falls below $1000 between the time you put in the money and the day your report the account balance, then you subtract that lowest balance from whatever the actual balance is. Once you take out you can’t replenish and carry it all over. </p>
<p>@concernedmom27 Just curious - you say that your daughter will be independent the following year (2015-2016) - so 2014-2015 is not her freshman year or she is getting married or turning 24?</p>
<p>I just mean that we cannot claim her on our taxes this year, she gets a drivers license and registers to vote, stays over the summer and earns $2000 or more and for her sophomore year and higher, she gets in-state tuition. Maybe “independent” isn’t the right terminology?</p>
<p>I don’t know the particulars about Mizzous’ requirements for instate tuition. Do read them very carefully–I am presuming you are so doing. Your DD should be visiting the financial aid office and asking for any instate scholarships for which she may be eligible due to change of status. There just might be something. How Mizzou’s fin aid office deals with FAFSA dependence issues and its own emancipation definitions for state tuition rates, and how all that plays into eligibility for fund reserved for instaters, I have no idea. There can be multiple definitions of being a state’s resident, from being a resident for voting, driver’s license, car registration, paying state taxes, in state tuition, scholarships and financial aid. They can all be different–I’ve so seen them. Need to talk to the holder of these scholarships and grants and make sure that your DD’s name is known to them, so that when any funds to which she’s eligible shows up , she can be in place to get them.</p>
<p>It might be a good idea for her to take out sufficient loan amounts so that SHE can claim the tax credit (AOG) since you won’t be able to do so. Look at the IRS rules that govern this credit. </p>
<p>She will NOT be an independent student. Just because Mizzou uses their own rules for determining instate tuition does NOT mean that the feds will consider her independent on FAFSA. Her FAFSA will still use YOUR financial data so she will still have the same EFC (if your income is the same). </p>
<p>If her EFC is over 6000 now, then I think your worries are unfounded…she wont get much/any aid anyway. </p>
<p>Use the NPC now with your income info and indicate that she is an instate student (ignore any instate merit offers since those wont apply) and see what grants (non merit) she is offered.</p>
<p>When you say that your D is attending next year…do you mean that she will be enrolling in 2015? </p>
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Along with the government loans, she must take out one private loan. The terms are fantastic and it is subsidized so we aren’t afraid of the loan.</p>
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<p>who offers a private loan that is subsidized? I have never heard of such a thing. Or do you mean that you dont have to make payments until after she graduates? </p>
<p>I think a bigger concern should be that you cant afford the instate rate either and she wont likely get more aid out of Mizzou unless your family EFC is at Pell level…which means more private loans. </p>
<p>I dont know what your D will be earning upon graduation (do you have any thoughts about this?), but if she will be responsible for both the fed loans and all of these private loans then she will have way too much debt. </p>
<p>I think the OP is just using the term “independent” because Mizzou does have a way for OOS students to be get in state tuition that involves living in the state year round with limited trips out, making at least $2K, not being a dependent on parents’ tax returns. This is a whole separate thing from being independent for FAFSA purposes. The school also does have grants that are open only to in staters for which the OP’s DD will technically be eligible for once she is considered an in stater. Whether she gets any or not is a whole other story. But the savings in doing this is $14K right on the spot, regardless of whether the OP’s DD gets any additional aid. </p>
<p>With instate tuition, maybe living frugally off campus and lowering room and board expenses, the increase in Direct Loan amount to $6500 as a sophomore does reduce the COA at that school.</p>
<p>I’m curious about the subsidized private loan option too.</p>
<p>I’m also curious about the terms of a SUBSIDIZED private loan. </p>
<p>And I’m not sure this private loan can be deemed a “college loan”. So the balance in the bank might need to be included on next years financial aid application forms.</p>
<p>For example…if I take a personal loan and put it in the bank…for say $25,000, I can’t say it’s a college loan…because it is NOT.</p>
<p>“”“The school also does have grants that are open only to in staters for which the OP’s DD will technically be eligible for once she is considered an in stater.”“”</p>
<p>But in another thread, the OP says that they can pay $15k per year. Sounds like the EFC would be too high at Mizzou to qualify for any grants even if the student is considered to be instate. </p>
<p>EFC would include parents’ income because that is a federal form, and the feds do not care that Mizzou might classify this student as instate…she will still be dependent in the feds’ eyes.</p>
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<p>I wonder if there is a misunderstanding about this. It may be a loan where payments don’t need to be made while the student is in school, but interest still accumulates. </p>
<p>It is a student loan and it is subsidized.<br>
From the web site where we found this loan, "The XXX Student Loan program subsidizes the loan while you are enrolled as a full-time student in an accredited undergraduate and graduate program.You’ll make no payments nor accrue any interest payments on your loan while enrolled in school.</p>
<p>You must borrow a minimum of $5,000/year and a maximum of $10,000/year for up to four years.
You will qualify for low interest rates upon repayment. (Rate: Prime - ¼ )"</p>
<p>I would rather not say the name as I may want it around for us in the future :)</p>
<p>I think you are right that they will still look at our finances for any aid in future years even though we cannot claim her on our taxes. I have read their claiming residency rules. I just wanted to know if having extra money in the bank under her name would hurt her if the money is from a student loan targeted for tuition. I doubt they will offer anything. They don’t seem very good about aid (unlike some other schools that I wished she had picked). </p>
<p>I think I have my answer that we don’t have to declare that money. I hope I am hearing that correctly. I’ve tried to get this answered by people from the loan company and people from Mizzou and they don’t answer my question. Not sure who else to ask.</p>
<p>I know she will be in more debt than people recommend, but we are in that in-between situation where we make just enough to not get aid and much too little to pay for her tuition ourselves. We did save so we have some money in a 529 but not enough to cover 4 years. She had great grades but lower than expected test scores, so Mizzou offered no scholarships and we are not minorities so they didn’t offer diversity awards (with frustration because most of her friends with identical financial and academic situations were offered them).</p>
<p>Yes, it is on the Jewish United Fund website… Ehrlich Student Loan Program</p>
<p>To qualify for a loan you must be a Jewish resident of the metropolitan Chicago area.
Undergraduates: Must have graduated from a high school in a county within the JF/JUF service area (Cook, Lake, McHenry, Kane, Dupage, and Will).
Graduates: Same as undergraduates or you must have lived in one of the counties within the JF/JUF service area for one year before electing to further your education.</p>