Leftover excess loan money

[beolein]

<p>Concerning Stafford and Parent PLUS loans,</p>

<p>If you finish your freshman year without having to spend all the loan money, do schools carry it over to the next year or give you a cash refund?</p>

<p>If you finish your freshman year without having to spend all the loan money, and your school carries it over to the next year, is your loan offer for the next reduced?</p>

<p>If you get the cash refund, is it treated as income by the IRS, and therefore taxed?</p>

<p>If it’s treated as income by the IRS, can you avoid that by having the school send the money to pay off principal instead?</p>

<p>If you finish your senior year without having spent all the loan money, do schools let you transfer the “credit” to a sibling currently in college?</p>

<p>If you are offered a certain amount of Stafford and Parent PLUS loans, but think you won’t have to spend all of it, is it better to take the whole loan just in case (and pay back any excess on principal as soon as you need no more) or to ask for a smaller loan?</p>

[notrichenough]

<p>

If you finish your freshman year without having to spend all the loan money, and your school carries it over to the next year, is your loan offer for the next reduced?

Staffords are not need-based, so the loan for next year would not be affected. I don’t know about Parent Plus loans.</p>

<p>

If you get the cash refund, is it treated as income by the IRS, and therefore taxed?

Loans are never income, and are never taxed. Even if you get some of it in cash, you have to pay it back.

If you finish your senior year without having spent all the loan money, do schools let you transfer the “credit” to a sibling currently in college?

No, although you could take the money in cash and give it to your sibling, who am I sure will thank you for subsidizing their education with loans <em>you</em> have to pay back.

If you are offered a certain amount of Stafford and Parent PLUS loans, but think you won’t have to spend all of it, is it better to take the whole loan just in case (and pay back any excess on principal as soon as you need no more) or to ask for a smaller loan?

What’s the carrying cost of the loan? Sometimes it might be smart to pay the interest in order to have a cushion, but it might be smarter to minimize the interest.</p>