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Options for a Student Whose Parents Refuse to Complete the FAFSA

Mark Kantrowitz

March 01, 2010

I am planning on entering a graduate program this summer. As a newlywed and homeowner I will be needing more financial assistance than the average student. My college’s financial aid adviser does not think I need a private student loan on top of the Stafford and Grad PLUS loans. According to my calculations I will. How should I approach this situation? — Elizabeth K.

Graduate and professional students can borrow up to $20,500 per year from the unsubsidized Stafford loan and up to the full cost of attendance minus other aid received from the Grad PLUS loan. The cost of attendance includes modest allowances for room and board in addition to tuition and fees and other direct educational costs. These allowances are intended to cover only the incremental costs associated with the student attending college, not the living expenses of other family members. Even if you were to somehow obtain private student loans on top of the Stafford and Grad PLUS loans, the excess over the cost of attendance would be considered a resource and your federal student loan eligibility would be reduced accordingly.

Some colleges will make an adjustment to the cost of attendance to include dependent care costs because this is explicitly permitted by the Higher Education Act of 1965. They may also increase the cost of attendance to cover the cost of student health insurance. But they will not increase the cost of attendance to cover discretionary lifestyle choices or expenses that are completely unrelated to enrollment in college. It is not uncommon for nontraditional and independent students to have higher than average living expenses, but current law does not permit student aid to be used to cover these costs.

Moreover, using education debt to make payments on your mortgage is a bad idea. You’d effectively be borrowing money to pay the interest on your debt, causing your debt to grow exponentially larger. Your debt at graduation will be excessive and you will probably end up defaulting on the loans and ruining your credit. Live like a student while you are in school so you don’t have to live like a student after you graduate.

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