Taking out more loans when on HPSP

[natedizzle]

I'm going to be a first year with the HPSP through the Air Force. Would I be able to get the subsidized Stafford loan? If so are there restriction to what you can do with the money? Say, put it into a CD for 4 years?

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[QM1]

First off, somewhere you must affirm the money is to be used for educational expenses , although that includes up to a certain amount of living expenses based on your location (determined by your school).

The answer to your question is maybe. I'll try and explain the best I can.

Let's say tuition is $25,000
Your school determines that the total cost of education (tuition plus books, fees, living expenses, etc) is $45,000
Your scholarship will take care of the $25,000, leaving $20,000 remaining.
Your stipend is considered earnings, NOT scholarship. This is important because when it's used as earnings, it's used to calculate student contribution on the FAFSA. If it is mischaracterized as scholarship, it will also be sutracted of the top, eg. if stipend is $14,000, now you'd only have a max borrowing of $6,000.
All this assumes no other scholarships or income.
I had the same issue last year and bugged the financial aid guy until he showed me the instruction used to determine how to classify the stipend.
Basically, if the money varies from person to person, like it might if it were need-based, it'd be considered scholarship, but because we all receive the same amount and because it's reported on the FAFSA from a W2 statement (in other words, it's wages being used already to determine student contribution) so it should not be deducted as more scholarship money.

Hope this helps

 

[MaxAnn]

If you are on hpsp, doesn't that disqualify you from participating in any loan repayment even after you have served your hpsp time committment? I am curious because many people end up borrowing whileo on hpsp b/c the stipend doesn't cover everything for cost of living.

Can someone correct me on this if I am wrong since it would be great to know.

 

[QM1]

Not sure about that, you're probably right. I still took out loans because although the stipend is probably fine for a single-just-out-of-undergrad-dental-student, it's not enough for a family of 4. I'm just going to pay them back myself.

 

[MaxAnn]

I understand your reasoning, and I don't blame you. I was just trying to clarify. There are some little hooks that some recruiters won't bother to tell you if you don't ask.

 

[Lesley]

I still took out loans

Great information in previous post. Were you able to borrow the full subsidized Stafford with the HPSP, or is the subsdized amount reduced if cost of attendance, less scholarship, stipend and income is less than $8,500? Thanks in advance.

 

[QM1]

I was able to borrow the full subsidized amount plus some unsub. Look at your last question again. Did you mean to state that your stipend and income are subtracted from the cost of education to come up with the available amount to borrow? If so, re-read my first post. Both those sources are used to come up with a (usually, I assume) much smaller amount that the feds calculate to be your portion. The rest you are able to borrow.

 

[Lesley]

I was able to borrow the full subsidized amount plus some unsub. Look at your last question again. Did you mean to state that your stipend and income are subtracted from the cost of education to come up with the available amount to borrow? If so, re-read my first post. Both those sources are used to come up with a (usually, I assume) much smaller amount that the feds calculate to be your portion. The rest you are able to borrow.

Thanks, I re read your first post. You're saying that if you qualify stipend as earnings, not scholarship, there is a greater chance of borrowing from the subsidized stafford. If you include it as a scholarship it's taken directly off the top and may reduce the the amount you can borrow from need based loans, subsidized stafford. So, qualifying the stipend as earnings is key. Thanks again.

 

[QM1]

Yes and also, in order to fill out the FAFSA, you need your W2's. The stipend money will be on one of them, so if you declare it as scholarship also, your counting the same money twice.

 

[Lesley]

Yes and also, in order to fill out the FAFSA, you need your W2's. The stipend money will be on one of them, so if you declare it as scholarship also, your counting the same money twice.

Thanks for the info.