This fall we will have a junior in college and a freshman in college. We were lucky enough to save enough to pay full COA and did not fill out the FAFSA for our oldest (she also got a large merit scholarship that brought COA way down). My question is for my S25 as we are thinking of getting the $5500 loan and letting it collect interest. However he received a substantial personal injury settlement and I’m wondering if this will disqualify him from getting the government loan?
The federally funded Direct Loan is available to any student who completes the FAFSA, I believe.
Remember, there is a fee to get this loan, AND the loan balance will accumulate interest. You might want to crunch the numbers. It sounds like you are hoping to make money by taking out this loan…and that might not be the case. You will be accumulating debt, and possibly no added money.
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As long as a school participates in federal student loan programs (only a handful do not), and the student files a FAFSA, the student will be able to borrow a $5,500 loan (most likely unsubsidized if the student has high assets, but it’s possible up to $3,500 could be subsidized). Interest for undergraduate loans for 2025-26 is 6.53%. The loan origination fee is 1.057%. This means that if a $5,500 loan is borrowed, the student actually receives $5,442 but pays interest on the full $5,500 borrowed. Interest begins to accumulate on the day the loan funds are disbursed. Loans are paid out 1/2 per semester (so $2,721 in this example), and interest begins to accumulate on the $2,721. When the other $2,721 is disbursed in the second semester, interest begins to accumulate on that amount as well. The interest adds up over time.
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Ah ok I see. Thanks. I misunderstood and thought there was no interest accruing until after they graduate. Nevermind!
There is no interest accruing during schooling for subsidized loans. Only a maximum of $3,500 would be subsidized for a freshman, but it depends on the results of the FAFSA, cost of attendance at a particular school & any other aid … it’s possible that the student might qualify for the full $3,500 subsidized, some portion of that amount subsidized, or no subsidized loans. The only way to know would be to complete the FAFSA & get a financial aid award letter from a school. If you complete the FAFSA & post the SAI here, we can give you some idea whether your child might be eligible for a subsidized loan based on schools they might attend.
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It will not. He will be able to get the loan if he/you files the FAFSA. It will likely be unsubsidized but he can get it.
One question. When we file the FAFSA form and submit it, do we opt for any loan like subsidized or unsubsidized) ? Or the college decides which to offer ? And also does it depend on the Income limit of parents ?
Loan eligibility is determined by the school, based on the FAFSA results. Dependent freshman are eligible to borrow $5,500 for the year. Up to $3,500 of that can be subsidized, based on the cost of attendance, SAI & other financial aid. A student may be offered the full $3,500 subsidized or $0 subsidized or some amount in between … but the combination of subsidized and unsubsidized will equal $5,500 (as long as the total of all aid doesn’t exceed cost of attendance). Some colleges don’t offer loans in the financial aid package they send the student, but as long as aid doesn’t exceed cost of attendance, the student can request the loans from the college’s financial aid office. Loans are guaranteed by the government, but the student applies for them through the school & the school requests the funds from the government & pays the funds to the student.
Thanks for the clarification. So even if we don’t expect any need based aid, it’s better to submit FAFSA for all the colleges we applied to ensure we can at least get the loan (and subsidized or not or partial subscized) is based on the college ?
Your student can get the federally funded Direct Loan only if you file a FAFSA.
But you don’t have to make that decision today. The student can file the FAFSA and get the loan for the 2025-2026 Academic year Direct Loan any time during that academic year…as long as ALL of the application is processed before their academic year ends.
So…you can wait and file a FAFSA once you know which college your child is attending if ALL you are expecting or want is the federally funded loan.
I’m pretty sure this is correct but @kelsmom will verify.
That is correct. There is no hurry to file the FAFSA in a case like yours. You can request a loan at any point in the year, as long as the student is enrolled at least half time. So you could even wait to take out the loan for second semester if you want (saving accrued interest).
This may be a dumb question, but this is my first grad student. (Applying to Juilliard)
The school has a deadline of 3/1 to apply for financial aid and scholarships. Required items include:
FAFSA
CSS Profile
A signed copy of your and your parents’ most recent tax return
For the FAFSA and CSS, is this student information only?
I am hoping that is the case. Really would love to have my CSS days behind me.
According to Juilliard’s financial aid website: Note to graduate students: We will waive the parent tax requirement only if you can prove that you were self‐supporting in the year prior to enrollment. Documentation may include your most recent tax return, or documentation of scholarships, loans or sponsor support. Scholarship decisions are based on a combination of financial need and merit combined. The financial strength of your family is an important consideration whether or not they will provide direct support to you during your graduate studies. In other words, if your student doesn’t meet the criteria, you will need to provide your information. I assume this means you will need to provide it on FAFSA & Profile - but call and check, because maybe not.
If you don’t want the student to be considered for anything other than federal student loans, the student will qualify for these with just their information & just filing FAFSA. They will need to coordinate with the school, since they technically will not have met the school’s requirements to receive aid … but they will have met the federal government’s requirements to borrow loans if they file FAFSA (and grad students don’t have to provide parent information to be eligible for federal loans).
So for consideration for scholarship, the FAFSA and CSS need both parent and student sections completed, correct?
That’s my assumption, but if I were you, I’d call to find out for sure.
Yep. I’m having son call tomorrow.
Thanks!
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