Explain Stafford student loan, please

[sandy]

Hi ladies

I am taking out a federal Stafford loan for graduate school next year.  (It must be unsubsidized because it is graduate school.)  I got the paperwork for my school and it says I can borrow up to $20,500 for the school year.

I know my Fall tuition will be about $8,000 to $10,000.  If I take out the full amount of the loan, they will be more more than that for the Fall.  What happens with the "extra" money??  Same thing for the Spring-- I don't yet know what my Spring tuition will be because I do not know how many classes I will be taking yet.  But I have to decided now have much loan to take out.  What if I accept all the loan money but my tuition ends up being less?

Thanks!

[gretchenindisguise]

You can get subsidized loans, even for grad school.

At least you could back in my day.

[gretchenindisguise]

Extra money is cut to you as a check. You can spend it on whatever you want.

don't spend it on hookers and blow.

[sandy]

Jun 28, 2013 23:20:43 GMT -5 gretchenindisguise said:

You can get subsidized loans, even for grad school.

At least you could back in my day.

Law changed last year.  Now only unsubsidized

[sandy]

Jun 28, 2013 23:21:25 GMT -5 gretchenindisguise said:

Extra money is cut to you as a check. You can spend it on whatever you want.

don't spend it on hookers and blow.

lol

Ok.  But what if I decided I don't need the "extra" after I find out what my tuition will be.  Then what?

[TrickyBob]

I'm in undergrad and my overage, I use to cover books and household expenses. Or I save it. Sometimes I spend it on random shit.

Other wise, if you're comfortable with spending it and paying it back later, you can do whatever you want. Some people save it and just use that as a lump sum payment to start off with or advanced monthly payments.

[TrickyBob]

Jun 28, 2013 23:24:54 GMT -5 sandy said:

Jun 28, 2013 23:21:25 GMT -5 gretchenindisguise said:

Extra money is cut to you as a check. You can spend it on whatever you want.

don't spend it on hookers and blow.

lol

Ok.  But what if I decided I don't need the "extra" after I find out what my tuition will be.  Then what?

You can leave it in there. Or take it out, put it into savings/CD/invest/whatever. Use it to pay back your loans. 

[sandy]

Ok. So talk to me like I'm an idiot (lol I had scholarships and generous relatives for undergrad so I've never had loans before and I am so confused!!)

Is this correct?
1. I accept the full loan amount.
2. The school automatically applies it to my tuition.
3. Any remaining money is sent to me at home as a check.

[Deleted]

Jun 28, 2013 23:24:54 GMT -5 sandy said:

Jun 28, 2013 23:21:25 GMT -5 gretchenindisguise said:

Extra money is cut to you as a check. You can spend it on whatever you want.

don't spend it on hookers and blow.

lol

Ok.  But what if I decided I don't need the "extra" after I find out what my tuition will be.  Then what?

I used it for books, whatever. Saved it for gas to class, since I drove about 50 minutes to class. Saved it when I did my student teaching since I didn't have time to work. Whatever. The more you take out the more you pay back, but one school I went to was ridiculous about giving you a total cost until about 6 weeks into class, so I always took out too much.

[gretchenindisguise]

Jun 28, 2013 23:27:08 GMT -5 sandy said:

Ok. So talk to me like I'm an idiot (lol I had scholarships and generous relatives for undergrad so I've never had loans before and I am so confused!!)

Is this correct?
1. I accept the full loan amount.
2. The school automatically applies it to my tuition.
3. Any remaining money is sent to me at home as a check.

That's how it worked for me.

Now things appear to be fancier with direct deposit - but same concept. 

You can also not take out the full amount and just estimate the best you can. 

[Deleted]

I took out the max my first year of law school because we weren't allowed to work. They cut the difference back to me in a check and I used the difference to pay for rent, food, and utilities. Second and third years I only took out what I needed for tuition and books because I had a job that was paying all of my bills.

[sandy]

Jun 28, 2013 23:26:10 GMT -5 killercupcake said:

Jun 28, 2013 23:20:43 GMT -5 gretchenindisguise said:

You can get subsidized loans, even for grad school.

At least you could back in my day.

Not anymore, mine are unsubsidized. I'm eligible for the Grad PLUS loan as well. I think that's supposed to replace the subsidized ones. 

Okay, so let's say you take the full 20,500 (the full amount offered per semester), and tuition is only 10,000, the loan will first disburse to your school and then the school will pay you the remaining 10,500, either in the form of a check or direct deposit (mine is DD). If you don't need it, I wouldn't take out the full amount, just what you need to cover tuition and maybe books. 

If you accept more than you need, you can give it back right away without incurring any interest. 

How do I do this?  How can I give it back to my school?  Will it then "roll over" to the spring/summer semester?

[Deleted]

Jun 28, 2013 23:27:08 GMT -5 sandy said:

Ok. So talk to me like I'm an idiot (lol I had scholarships and generous relatives for undergrad so I've never had loans before and I am so confused!!)

Is this correct?
1. I accept the full loan amount.
2. The school automatically applies it to my tuition.
3. Any remaining money is sent to me at home as a check.

Yes. It's disbursed over two semesters. If you're offered 20,000, you take the full amount, 10K is applied to each semester. Semester 1 cost you $8500, you'll get a check for $1500. Semester 2 cost you $9000, you'll get a check for $1K. Checks are disbursed twice a year, usually about a month or so after you've started classes.

[gretchenindisguise]

Jun 28, 2013 23:24:08 GMT -5 sandy said:

Jun 28, 2013 23:20:43 GMT -5 gretchenindisguise said:

You can get subsidized loans, even for grad school.

At least you could back in my day.

Law changed last year.  Now only unsubsidized

That sucks. 

[Deleted]

Jun 28, 2013 23:28:58 GMT -5 sandy said:

Jun 28, 2013 23:26:10 GMT -5 killercupcake said:

Not anymore, mine are unsubsidized. I'm eligible for the Grad PLUS loan as well. I think that's supposed to replace the subsidized ones. 

Okay, so let's say you take the full 20,500 (the full amount offered per semester), and tuition is only 10,000, the loan will first disburse to your school and then the school will pay you the remaining 10,500, either in the form of a check or direct deposit (mine is DD). If you don't need it, I wouldn't take out the full amount, just what you need to cover tuition and maybe books. 

If you accept more than you need, you can give it back right away without incurring any interest. 

How do I do this?  How can I give it back to my school?  Will it then "roll over" to the spring/summer semester?

You can give it back when you get a bill in the mail for your interest. Your actual payments will be on hold until your graduation, but you'll typically get a "pay if you want" bill for interest. And if you wanted, you could put the extra on that when you get it. So you'll start paying the interest and the principal early.

ETA: And no it doesn't roll over.

[sandy]

Thank you everyone! Much appreciated

[Raggedeannie]

You said The $20,500 is for the whole year, or semester?

They would usually pay in 2 installments. Any extra would be paid to you by check. You can pocket it and pay back as part of normal loan payments when your loans enter repayment (loan companies assume you are using it for other expenses such as books, housing etc), or you can pay back the difference immediately.

I wasn't working while in grad school so used the loan excess to pay my rent.

[Raggedeannie]

Also, Rather than wait for a bill, I think you have something like 30 days following disbursement to return all or part of the loan to "reduce" the loan amount and return the difference without penalty or interest.

[overture]

Jun 28, 2013 23:31:18 GMT -5 killercupcake said:

Jun 28, 2013 23:28:58 GMT -5 sandy said:

How do I do this?  How can I give it back to my school?  Will it then "roll over" to the spring/summer semester?

I'm honestly not sure. I think you just call the loan processor and repay it back to them like a normal payment. This will be in your loan paperwork and in all of the presentations you have to sit through (like 10 minutes of powerpoints online so they can make sure you understand) if you accept the loan though, so you'll be able to find out.  

No, it won't. Schools won't hold funds, that's why they pay overages back to you. 

As far as I know, you're not really "paying" it back, you're just reducing the amount of your original loan by giving it back.  There is a max amount they can award you each year, which is split evenly over the two semesters.  Nothing rolls over.

Work out your budget ahead of time, and you can just borrow less than the awarded amount from the beginning, which is probably easier.  Usually you can do it online through whatever system you use to pay your fees.  It will probably show the amount you've been offered and ask you to enter the amount you're going to accept before you sign the promissory note.