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Loan question


mooooom
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If you are receiving financial aid from a school (grants), I'm assuming assuming you also have to take all the loans they offer you - or they would think you didn't need grants?

 

Also, does anyone know what would happen if you had a little extra and started paying off a bit of the loans here and there? Would the school find out about it and reduce aid?

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You aren't required to take out all the loans they offer and often the amount offered is in excess of what is needed. When your student receives the actual award offer there will be a place where they can indicate that they are accepting or denying the loans. The fact that the loans are available doesn't mean your student should take the full amount or that it would look bad if they didn't. If anything schools would certainly like for the average amount of loans students take to be lower because that reflects better on the school.

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Making payments on the loans while still in school is an excellent idea because interest is accumulating (if they are not subsidized federal loans). If you can make payments once in a while then less interest will be added to the loan amount. Just paying the interest quarterly will save a lot of money. If the loan is subsidized, then making payments will definitely reduce the principle, obviously saving money over the life of the loan. Payments are not required while the student is still in school, but can be made at any time without penalty.

 

I have not heard of grants being reduced just because a student is making payments on a loan or because a student refused a loan. Grants are usually offered first, then loans are offered to cover the rest of the cost of attendance.

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