Minimize Your Student Loan Debt: Declining Awarded Student Loans
Colleges sometimes include the maximum available federal student and parent loans on financial aid award letters to bring the amount of awarded financial aid closer to the total cost of attendance. It’s not always clear that you don’t need to accept the full amount of all loans if you don’t want to.
If you can reduce your expenses or earn more money to offset awarded loans, you will have less debt after you graduate. When you use student loans, you’ll not only need to repay the amount of the loan, you’ll also be responsible for interest. And, it won’t matter if you don’t finish school, don’t find a job or earn less than you expected. Once you accept the loan, you (or your parents in the case of a federal PLUS Loan for parents) are responsible for repaying it.
If you are awarded more loan funds than you think you will need, it’s important to decide exactly how much you will need in loans.
Need some, but not all, of the awarded federal student loan amount? You can always accept only the loan amount you need. You may:
- Fill in the amount you want to take out on the document you return the financial aid office if you need to sign and return a paper copy.
- Choose the electronic option for accepting or declining each applicable loan, or for taking out a partial loan amount, if you accept your financial aid online.
- Contact the financial aid office if you are unable to determine how to accept a partial award.
Can you forego all loans? Many students have the goal to attend college loan-free. Even if you know you will eventually need to take out some loans, declining all loans for one semester will save you capitalized interest later on. If you want to decline the offered loans:
- Cross out the loan amount or select the “decline” option on the document you return the financial aid office if you need to sign and return a paper copy.
- Choose the electronic option for declining each applicable loan if you accept your financial aid online.
- Contact the financial aid office if you are unable to determine how to decline loans.
What if you change your mind? If you later decide you need more or fewer loan funds, you should follow your college’s instructions and timeline for changing your accepted award. Many online systems allow you to make this change, or you can contact your financial aid office for assistance. You may need to act before loan funds are disbursed or contact the lender after disbursement.
Considering PLUS Loans? Although PLUS Loans may appear to be part of your awarded financial aid, your parents need to request these loans. Because they will also be responsible for repayment, discuss your parents’ expectations with them.