Perkins vs Stafford subsidized loans

[billcsho]

I have responded in another thread with this situation but I think I should start my own thread to follow up on that. We have an interesting situation. Last year, my D was originally offered a small loan (Stafford subsidized) in her freshmen estimated FA package but was replaced by grant at the end. This year, the tuition goes much higher as she is considered upperclassmen and the institutional scholarship has not shown up yet in her account. So there are similar amounts in Perkins Loan and Stafford Subsidized Loan. I know at the end the scholarship would replace at least one of the two and the work study, but the FA office is urging us to sign the form and get the money disbursed. I am not sure if I should wait for another month after the scholarship appeared in her account or just sign the paper now. If possible, I lean on getting the Perkins Loan instead of Stafford due to the origination fee. So what would happen if we signed the papers and get the loan before the scholarship comes in. Do we need to return the loan immediately? Do we have the option to return or decline one or the other?

[kgos16]

Your school can work with you to facilitate a return of either of those loans. Also, if you borrow he stafford now and later cancel the entire loan at anytime during the school year, the origination fee is returned as well, so it shouldn’t matter which option you take. Every school will have a different cancellation process, so you will want to have your daughter inquire about what paperwork will need to be filled out or how she needs to indicate she no longer wishes to borrow the loan.

[4kidsdad]

120 days See http://www.direct.ed.gov/dlplain.pdf

Within 120 days of the date your school disbursed your loan money (by crediting the
loan money to your account at the school, by paying it directly to you, or both), you may
return all or part of your loan to us. Contact the Direct Loan Servicing Center for
guidance on how and where to return your loan money. You do not have to pay interest
or the loan fee on the part of your loan that you return within 120 days of the date that
part of your loan is disbursed.

[billcsho]

Thanks for the info. I will do the paper work over the weekend.

[billcsho]

Just an update. My D signed both forms for Perkin and the Stafford Loans last week. Then the institutional scholarship showed up in the FA package today. They removed the Stafford Loan and reduced the Perkin by 40% but leave the work study untouched. That is great as Perkin has no origination fee and there will not be excessive loan to be returned within 120 days.