FAFSA loan type change after new scholarship - Sub vs Unsub ratio shifted?
Just found out my son got an additional merit scholarship from his university (yay!) but now I'm confused about what happened to his federal loans. When I logged into his account, I noticed something weird with his Fed loans. The financial aid office told me we need to re-accept his UNSUB loan because 'there was a change.' The total federal loan amount is still $5,500, but now more of it is UNSUBSIDIZED instead of SUBSIDIZED. Why would getting more scholarship money shift the ratio from subsidized to unsubsidized loans? Doesn't make sense to me - shouldn't more scholarship mean less loans overall?
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Max Reyes
Congrats on the additional scholarship! What you're seeing is actually normal. Subsidized loans are need-based, while unsubsidized loans aren't. When your son received more scholarship money, it reduced his 'financial need' calculation. Since subsidized loans can only be given based on demonstrated need, some of that was converted to unsubsidized loans. The total amount stayed the same because that's the annual federal loan limit for his grade level.
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Felicity Bud
•Oh that makes sense now! I always thought all federal loans were need-based. So basically his 'need' went down because of the scholarship, which meant less subsidized loans. Thanks for explaining!
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Mikayla Davison
THIS IS THE STUPID STUFF ABOUT FAFSA THAT DRIVES ME CRAZY!!!!! They punish you for getting scholarships by giving you WORSE loans?? How is that fair??? My daughter had the EXACT same thing happen and we ended up paying MORE in interest because of it. The whole system is designed to trap families in debt I swear.
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Max Reyes
•It's frustrating, but it's not exactly a punishment. The subsidized loans (where government pays interest while in school) are specifically for students with higher financial need. The scholarship reduced the calculated need, so some subsidized eligibility was lost. The total borrowing amount didn't change, just the subsidy benefit. Your daughter could always accept less than the maximum loan amount offered.
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Mikayla Davison
•It FEELS like a punishment when you work hard for scholarships and then get LESS beneficial loans! And try telling an 18-year-old to "just borrow less" when they need the money for books and housing. The system is broken.
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Adrian Connor
same thing happend to my son last year. his scholar ship went up and they changed his loans around. we just accepted it and moved on but ya its weird
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Aisha Jackson
This is a standard adjustment based on how the federal financial aid formulas work. Subsidized loans (where the government pays interest while student is in school) are only available based on financial need calculated from your SAI score. When outside scholarships come in, they reduce that calculated need, causing a shift from subsidized to unsubsidized loans. Your total loan eligibility ($5,500) doesn't change because that's based on grade level, not need. The breakdown between subsidized and unsubsidized is what shifts. If you're trying to minimize loans, you should now reject some of the unsubsidized portion since those accrue interest immediately.
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Felicity Bud
•Thank you for the detailed explanation! That's exactly what we're going to do - reject some of the unsubsidized portion. I just wanted to make sure we understood what was happening before making any decisions.
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Ryder Everingham
wait I'm confused - is this a good thing or bad thing? I'm filling out FAFSA for first time and I don't understand difference between sub and unsub loans??
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Aisha Jackson
•It's generally less favorable. Here's the difference: Subsidized loans: Government pays the interest while student is in school and during deferment periods. Unsubsidized loans: Interest accumulates from day one, even while in school. Both have the same interest rate, but subsidized loans save you money because interest doesn't accrue while studying.
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Ryder Everingham
•oh wow thats a huge difference! so subsidized is way better. thx for explaining that!
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Lilly Curtis
If you're having trouble getting clear answers from the financial aid office about this loan change, I recently discovered a service called Claimyr that helped me get through to a live FAFSA agent in minutes instead of waiting on hold for hours. They have a video showing how it works at https://youtu.be/TbC8dZQWYNQ. I used it when I had questions about my daughter's loan adjustment after her outside scholarships changed. The FAFSA agent was able to explain exactly what happened with the subsidized/unsubsidized split and walked me through our options.
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Felicity Bud
•Thanks for the tip! The financial aid office actually explained it pretty well in our case, but I'll keep this in mind if we run into problems in the future. Those wait times can be brutal.
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Leo Simmons
When my daughter started college last yr we had something like this happen but it was bc we made a mistake on the fafsa income info and had to correct it later. Are u sure its from the scholarship and not some other change?
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Felicity Bud
•I'm pretty sure it's from the scholarship since the financial aid officer specifically mentioned that when explaining the change. We didn't make any corrections to our FAFSA. But that's good to know that income corrections can cause similar changes too!
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Max Reyes
The good news is that your son can choose to accept only part of the unsubsidized loan if you don't need the full amount. Just log into the student portal and reduce the accepted amount. A lot of families don't realize they can accept less than what's offered.
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Felicity Bud
•That's exactly what we're planning to do! We're going to sit down this weekend and figure out the minimum amount we actually need to accept. The extra scholarship will definitely help reduce how much we have to borrow.
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Lindsey Fry
My daughter had something similar happen with her FAFSA loans after getting a department scholarship. Weird thing was that the following semester we had to reaccept everything again even though nothing had changed. Dealing with financial aid offices is SO confusing sometimes!
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Adrian Connor
•omg tell me about it! every semester is like starting from scratch with these people
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Nathaniel Mikhaylov
This exact same thing happened to us two years ago! At first I was so confused and honestly a little frustrated - like why would getting MORE aid result in "worse" loans? But after talking to the financial aid office, I realized it's just how the federal system is designed. The subsidized loans are essentially a limited resource that goes to students with the highest calculated need first. When your son's scholarship reduced his "need" on paper, it freed up some of that subsidized loan money for other students who now had relatively higher need. It's actually kind of fair when you think about it that way. The silver lining is you can now reject some of the unsubsidized portion since the scholarship covers more of his costs. Congrats on the additional scholarship - that's the real win here!
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Felix Grigori
•That's such a helpful way to think about it - that the subsidized loans are like a limited pool that goes to whoever needs it most! I was definitely feeling frustrated at first too, but your explanation about it being fair to other students makes me feel better about the whole situation. You're absolutely right that the scholarship is the real win here. We're definitely going to take advantage of being able to reject some of the unsubsidized portion now.
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