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 students don’t need to accept the full amount of all loans.

Reducing expenses or increasing earnings to offset awarded loans will mean less debt after graduation. Not only would the amount of the student loans need to be repaid, but so will interest that accrues daily on those loans. And, it won’t matter if college doesn’t result in graduation, a job or the anticipated earnings. Once the loan has been accepted, the student (or parents in the case of a federal PLUS Loan for parents) is responsible for repaying it.

If the awarded loan amount seems like more than the student will really need, it’s important to decide exactly how much to borrow.

Need some, but not all, of the awarded federal student loan amount? Students can always accept only the loan amount they need. To take a partial loan amount:

  • Fill in the desired loan amount on the document to be returned to the financial aid office if a paper copy needs to be signed and returned.
  • Choose the electronic option for accepting or declining each applicable loan, or for taking out a partial loan amount, when accepting financial aid online.
  • Contact the financial aid office if it’s not clear how to accept a partial award.

Can all loans be declined? Many students have the goal to attend college loan-free. Even if some loans will eventually be needed, declining all loans for one semester will save capitalized interest later on. To decline the offered loans:

  • Cross out the loan amount or select the “decline” option on the document to be returned to the financial aid office.
  • Choose the electronic option for declining each applicable loan if financial aid is accepted online.
  • Contact the financial aid office if it’s not clear how to decline loans.

Considering PLUS Loans? Although PLUS Loans may appear to be part of the awarded financial aid, they are not automatically paid to the student or institution. Parents need to request these loans. Your family may wish to compare the terms and benefits of a PLUS Loan with those, like our College Family Loan, offered by private lenders. These loans may have different fees or interest rates. Be sure to discuss repayment expectations as a family if parents will be responsible for repaying the PLUS or other loan debt.

By: Iowa Student Loan

Working During Spring Break

How much money can you save by working over spring break instead of going on a trip? The specific answer depends on several circumstances, but the average savings could be in the thousands of dollars. Here’s a breakdown.

Assume you make $9 an hour and work eight hours a day for six days of a nine-day break. Your earnings after taxes would be $375.

Add to that your savings for not traveling to a typical spring break destination, which could be over $1,000. See how you can apply these earnings to college expenses.

Earnings  
Hourly Wage $9
Hours Worked Over Break (9 Days) 48
Net Earnings After Taxes $375
Savings  
Average Flight + Hotel Cost (5-Night Stay) See source $1,077
Total (Net Earnings + Travel Savings) $1,452

By: Iowa Student Loan

What to Do If a Financial Aid Award Is Inaccurate or Incomplete

When that financial aid award notification arrives, check it carefully. Here are some circumstances you may run into and what you can do.

Situation What to Do
Contact information is incorrect. Contact the financial aid office with updated information. The student should also log in to the FAFSA portal to update information.
Financial information has changed since you submitted your FAFSA. Contact the financial aid office about drastic financial changes due to loss of a parent’s job or other circumstances.
The student wants to be considered independent for financial aid purposes due to a severed relationship or abusive situation. Students with extenuating circumstances in regard to their relationship with their parents may contact the financial aid office to clarify the situation and determine the dependency appeal process.
An expected federal or state award is not listed. If the student qualifies for but didn’t receive a federal or state grant or scholarship, first determine if the award is automatically granted to all eligible applicants.

  • If an automatic award wasn’t received, contact the agency responsible for administering it and notify the financial aid office.
  • If the award is not automatic, funds may not be available for all applicants. You may try contacting the agency administering the award to see if any remaining funds will be awarded later.
An expected institutional award is not listed. Not all awards are automatically granted to all eligible students. If the FAFSA was filed by the college’s priority deadline, contact the financial aid office to determine if any institutional awards are still available. If the award was offered by a specific department, ask a financial aid representative if the office has been made aware of the award.
A state or federal award was submitted to the wrong college. Contact the agency responsible for administering the award. Also notify the financial aid office and the financial aid office at the other institution of the mistake.
An unexpected award is listed. Many colleges consider an application for admission to also be an application for other institutional awards. If the student doesn’t meet the qualifications for an award, contact the financial aid office to clarify.
A grant or scholarship awarded by an outside entity isn’t shown. Tell the college about all grants and scholarships received. If an award is missing, contact the financial aid office.
A work-study award is listed. This award may be dependent on the student finding a work-study position and earning a paycheck based on hours actually worked. Start with the financial aid section on the college’s website. If that doesn’t contain information about how to locate and apply for work-study positions, contact the financial aid office.
Not enough aid was awarded to cover costs of attendance. If there is a large difference between aid and costs, some options to consider are:

  • Contacting the financial aid office to inform them of the situation and see if any additional aid is available.
  • Increasing student employment to earn income to cover the shortfall.
  • Asking about monthly payment plans.
  • Exploring less expensive education options, such as a public university or community college.
  • Relying on gifts or federal PLUS Loans for parents to help pay for college.
  • Taking out private student loans to cover the remaining expenses.

By: Iowa Student Loan