What to do with my FA package/award

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I just got my award package today and here's some info
- COA is ~ $59K. That includes living expenses, food, housing, etc...
- Since I own my home, and am supported by my husband, I calculated that the amount I need would be around $38K

Questions:

- There are multiple sources of loans including grad plus and unsub stafford. If I only accept a portion of unsub stafford and reject grad plus, would it affect my award package next year? (i.e. will they take it away cuz they thought I didn't need it this year) I don't need it, but I rather have it included in the package in case I do need it.

- If I accept the loan, and don't use all the money, can I use it to pay the debt (i.e. returning it to the loaner) while I'm in school? Is there some sort of penalty if I do that?

- I have about $70K in stocks that I'm planning to use for school. What's the best way to use it? Should I divided it evenly for 4 years or should I just pay off the first 2 years myself? When I sell these stocks, I'll have to pay tax for it, which hopefully I'll get back most of it because it'll be my only source of income while I'm in school. What should I do?

Thanks so much!

Originally Posted by lnphan

There are multiple sources of loans including grad plus and unsub stafford. If I only accept a portion of unsub stafford and reject grad plus, would it affect my award package next year? (i.e. will they take it away cuz they thought I didn't need it this year) I don't need it, but I rather have it included in the package in case I do need it.

You can accept/reject whatever loan amounts you want without it affecting your future loans.

Originally Posted by lnphan

If I accept the loan, and don't use all the money, can I use it to pay the debt (i.e. returning it to the loaner) while I'm in school? Is there some sort of penalty if I do that?

Yes, or just hold onto it and take less loans next time.

Originally Posted by lnphan

I have about $70K in stocks that I'm planning to use for school. What's the best way to use it? Should I divided it evenly for 4 years or should I just pay off the first 2 years myself? When I sell these stocks, I'll have to pay tax for it, which hopefully I'll get back most of it because it'll be my only source of income while I'm in school. What should I do?

I would max subsidized loans ($8500/yr) no matter what as they don't accumulate interest during school. Then it depends on how much gains you are getting from your stocks vs interest rates of loans (ie stocks gaining less than interest of loans, pay with stocks and vice-versa).

Originally Posted by lnphan

- I have about $70K in stocks that I'm planning to use for school. What's the best way to use it? Should I divided it evenly for 4 years or should I just pay off the first 2 years myself? When I sell these stocks, I'll have to pay tax for it, which hopefully I'll get back most of it because it'll be my only source of income while I'm in school. What should I do?

If all the stock money is going to be used for school (that's the impression I am getting), then it should not be in stocks. The risk does not justify the reward. Money in stocks is money that you plan to leave there for five years or more.

If you personally are comfortable with the possibility of taking a significant loss in the stock market (and there are reasons to justify this- after all you can always get a student loan), then you could minimize your tax liability by withdrawing 1/4 every year. But the gains on your investment are likely so small (the maximum possible would be $70K, a small fraction of your attending salary after all) that the tax liability is also likely to be very small.

Originally Posted by cofcemt

Yes, or just hold onto it and take less loans next time.

Wouldn't the loan accrue interest if I hold on to the excess money this year (and take less loans next time) instead of returning it to the creditor?

Originally Posted by cofcemt

I would max subsidized loans ($8500/yr) no matter what as they don't accumulate interest during school. Then it depends on how much gains you are getting from your stocks vs interest rates of loans (ie stocks gaining less than interest of loans, pay with stocks and vice-versa).

Sadly the subsidized loan is gone. I was lucky enough to get it this year because I'm taking summer class, but after this year it's gone.

As for the stocks, it's pretty stable. It's been stable for the past 7 years (IBM stocks) and most likely stay that way. What I had in mind was selling just enough stocks so that I can get the most money back comes tax time. Anyhow, I guess I'll sell as much as I need to.

Thanks so much for your replies.

Originally Posted by lnphan

Wouldn't the loan accrue interest if I hold on to the excess money this year (and take less loans next time) instead of returning it to the creditor?

I meant take as much as you think you need. Then, if you have extra, just hold onto it (probably wont know till end of year/semester) then just take less loans the next year.

If you need more, you can always go back into fin aid and get more funds disbursed (as long as you haven't taken them all out already).

Originally Posted by lnphan

- I have about $70K in stocks that I'm planning to use for school. What's the best way to use it? Should I divided it evenly for 4 years or should I just pay off the first 2 years myself? When I sell these stocks, I'll have to pay tax for it, which hopefully I'll get back most of it because it'll be my only source of income while I'm in school. What should I do?

the answer to this is pretty obvious to me.....use the money you already have to pay for med school for as long as you can. You're paying interest on the loans you take out to pay for med school from the day you borrow them therefore it is way more advantageous to use your own money during first year rather than fourth year because you save yourself a year of interest that's accruing on the loans. (i'm assuming your money in the stock market isn't making anywhere near 6.8%)

the rub here is that you don't want to sell all the stock at once and have to pay taxes that would exceed 1 year of loan interest however i don't think, as a student, that should be a problem if you sell 35k worth of stocks each year but you should check on that.

Originally Posted by cofcemt

I meant take as much as you think you need. Then, if you have extra, just hold onto it (probably wont know till end of year/semester) then just take less loans the next year.

If you need more, you can always go back into fin aid and get more funds disbursed (as long as you haven't taken them all out already).

wow i was going to ask literally the same question. thanks to the OP for posting it.

but about this part that you mentioned.


so, i'm really wary of overloaning. i know its early, but one of my schools is giving me the option to accept or decline or accept part of... a federal loan package.

so, if i overloan, well then i can just use some next year, but as it has been said, why overloan, thats just more interest to pay.

if i underloan.... can i go back to the financial aid office and ask for more? i know the logical thing to do would be to just ASK my school... but while i'm on here... do most schools allow you to ask for more federal loans during the school year?

i kind of assumed that federal loans were done directly through the gov't. but it seems as though you do it through your schools financial aid office....

Yes you can request more from the school up to your cost of attendance after the original disbursement with a form in financial aid. If you request grad plus keep in mind you are signed on your credit report for a credit check.