<p>My sweet very elderly grandparents have surprised me by announcing that they are planning to give me $5K in a few months for my birthday. I would like to apply it towards my 1st year's Stafford Loan. I am worried that a decrease in the balance of my loans will affect my EFC. Does the balance of outstanding loans come into play at all? I have grants and Stafford loans - no private loans - and it sure would be nice to start paying them off. I definitely do not want to put this money in my savings account. Your thoughts?</p>
<p>I would ask your grandparents to “give” the money to your parents who will then use it towards the loans.</p>
<p>If your GP’s give you money, then it might be a problem…but if they “give” it to your parents, then it won’t. </p>
<p>A decrease in loan balance (or the amount that you borrow) isn’t what will change your EFC…but a financial gift to YOU from the grands might. However, I believe that money gifts to PARENTS do not affect EFC.</p>
<p>Thanks mom2! </p>
<p>My parents were planning to ask my GPs to send the check directly to Great Lakes which I know they won’t mind. We just didn’t know whether our EFC would increase the following year since it looks like I had funds --albeit not mine-- to lower the loan balance.</p>
<p>I wouldn’t have them sending the check directly to the school. On FAFSA, you have to report if anyone else is paying for your schooling, and you’d have to report that. That may hurt your EFC.</p>
<p>Your grands need to “gift” your PARENTS with the check, have them deposit it, and have THEM write the check to your college.</p>
<p>Great Lakes is not a college, it is company that handles student loans for the Feds.</p>
<p>Ha ha…I thought it was a college name… lol…</p>
<p>I’m confused then…I thought this $5k would mean that the student wouldn’t have to take out the loans this fall. If so, then why send a check to some loan processing place.</p>
<p>Or is this to pay a loan from the previous school year? </p>
<p>When the student asked about 'decrease in balance of loans" and how it will affect EFC…I thought she meant a decrease in the amount of loans in her 2012-13 aid pkg might suggest to the school and FAFSA calculations that she needs less money for next year. …but she must mean a decrease in the amount that she currently owes.</p>
<p>:) I meant a decrease in the loans I borrowed my freshman year. And yes, Great Lakes is the loan processing company.</p>
<p>When my GP’s decided to get their affairs in order and give me a gift, I thought about eliminating most of my first year’s debt. But the reduced loan balance will show on the last page of my FAFSA report, on the “Your Financial Aid History Information” page. The Total Principal Balance column will show a decrease and I don’t know if this would affect my EFC for my senior year financial aid.</p>
<p>Sorry if I was not clear…</p>
<p>Loan balances have no effect on the FAFSA EFC. They are not anywhere in the EFC formula.</p>
<p>petiza – Based on what I have seen in my son’s FAFSA submissions (he has made some payments while still in school) and his FA situation, paying down your loan will not affect your EFC. There are folks with much more knowledge likely to respond to you, but I do not see why your obligations to pay in the future (after graduation or a gap in enrollment) would affect your EFC.</p>
<p>Yessss! Thank you all for your responses! :)</p>
<p>I’m confused about m2ck’s replies here – where would a cash gift to the student be reported on the FAFSA? It’s not income, is it? I would have thought that if the student received a monetary gift and spent it before filing the next FAFSA (so it wasn’t sitting in the student’s bank account) it would not impact anything. If it is reportable somewhere for the student, wouldn’t it also be reportable for the parent, and still impact the EFC?</p>
<p>mathmom - FAFSA has a question about untaxed income. One of the things that is listed under untaxed income is money received by the student from others, including expenses paid on the students behalf by anyone other than the students parents. </p>
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<p>It wouldn’t be reported as both parent and student income, that would be double reporting it.</p>
<p>Thanks for that clarification swimcatsmom. What I meant about it counting for the parent was not double-reporting it, but if the OP used the suggested strategy of having the grandparents give the money to the parent instead, then wouldn’t it be untaxed income to the parents? I know parental income counts less than student income, but it still does count quite substantially. Or for parents is there not the part about “money received”?</p>
<p>The “standard” advice I’d heard for situations like this was to ask the grandparents if they could wait until after the last FAFSA is filed to give the gift. But if the student has unsub loans they would have otherwise paid off early, then I guess you need to calculate whether the change in EFC would be more or less than the compounded interest over those extra years.</p>
<p>will the school know if you pay off Stafford loans early? - I’m afraid to jeopardize grants my kids received by not accepting the unsubsidized loan, but if I can, I want to scrape up the money to pay it off before it accrues a lot of interest.</p>