<p>My efc is very low. I have accepted a subsidized loan and a Perkins loan amount that I don't need anymore(gift from a relative). Would not taking the loans cause the FA office to make inquiries, get suspicious, or something along those lines?</p>
<p>You do not have to take the loans.</p>
<p>But…if this was a one-time gift and you will have to borrow for subsequent years, you might consider banking the subsidized loans so that you don’t have to take unsub loans in future years. This year and next year, the Stafford sub rates are lower than they have been in years (4.5% and 3.4%) and are actually better than Perkins loan rate of 5%. Unless new legislation changes the loan rates, sub loans are scheduled to go back up to 6.8% after next year.</p>
<p>sk8rmom, an hypothetical question: Let us say a student borrows say $5000 in loans they do not use and the bank it. Would that count against the student next year, i.e. 20% of the assets, so EFC gets reduced by $1000. Again, the student has $5000 in the bank, so they can use that to pay for higher the EFC, so it may not really matter much. Would it be better for the parent to bank it, i.e. student uses the loan to pay the fees, the relative gives that amount to the parent who banks it in their name and provides it to the student next year?</p>
<p>No…for two reasons. First, per the FAFSA instructions, proceeds of student aid are not reportable for FAFSA purposes. But any investment account is reported at net asset value - that is, net of loans against the asset. So student loans have a NAV of 0. Only the accrued interest would be reported for FAFSA. The student should, of course, keep records of where the money came from in case their FA office questions it during verification.</p>
<p>^^^^ sk8rmom: Thanks for the clarification</p>
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<p>Thanks for the info about the rates sk8rmom, didn’t know about that. So I could borrow the $3500 in sub loans this year and not use it, saving it until 2012-2013? Also, are there any benefits to taking a Perkins loan over a Stafford sub? Since its borrowing school money.</p>
<p>Perkins loans have a 9 month grace period before repayment begins. Stafford loans have a 6 month period. I would take the Stafford sub over the Perkins for the next two years due to the long-term rate advantage. Also, I don’t believe Perkins loans have the number of repayment options that Stafford loans do - IBR, for example - unless you have them consolidated with your Stafford loans (but you then lose the Perkins rate advantage). Perkins loans are normally repaid directly to the school, so they can make new loans to students. I believe there is a minimum monthly payment of $40 or $50 whether the amount you owe is $200 or $2000.</p>