Does anyone have experience or knowledge of how colleges (in general) consider personal loans students obtained from extended family members?
Are they handled & viewed the same as the loans provided by the colleges themselves & bank personal loans?
Are there repercussions to not accepting Stafford type loans & replacing them with family loans? As in the following years the school’s won’t continue to offer Stafford if one year you use a family loan instead?
Obviously, these loans would be to pay for college COA.
Any student is allowed to apply for and receive a Stafford loan every year if the student is qualified (citizen or otherwise qualified status, amount of pervious loans). Receiving funds from relatives in an informal way may be deemed a gift and might change eligibility for need based institutional aid or other need based aid.
It’s none of the school’s business if you/your family obtain loans from friends, family, home equity loans, etc.
Does not affect your ability to take out Stafford loans in later years.
Maybe schools are concerned that loans from relatives are disguised gifts that are planned to be forgiven after graduation - and are used to circumvent aid calculations.
If this student is only concerned about the Direct Loans…he doesn’t need to worry. Every student who competes a FAFSA is eligible for a Direct Loan…doesn’t matter what happened last year.
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Maybe schools are concerned that loans from relatives are disguised gifts that are planned to be forgiven after graduation - and are used to circumvent aid calculations.
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That may be, but unless schools ask if a loan will be later forgiven, they don’t need to be told.
And, this can really be avoided if the “money gift” is given to the parents.
^True-Gifted to parents within limits (or giver files a gift tax return), and parent pays the tuition (watch the timing so it’s gifted and then paid to school without sitting in an account as an asset).