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Can I be denied my request for unsubsidized Direct Loan?

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maneki

Member
What is the name of your state (only U.S. law)? Colorado

I'm in college and my previous school had told me that to receive the UNsubsidized portion of the Direct Loan (not private loans) all I had to do was request it, I couldn't be denied since it's not need based. My current school however is saying that I have to apply for the unsubsidized loan and if they feel my need is justified I will be given it, but that they can also deny my request. This information is obviously the opposite of what I was told at the other school so I'm a bit confused. I'm trying to find out if the school can legally deny my request for the unsubsidized portion of my Direct Loan, the federal student loan program. I do understand that if a schools default drops too low they won't be allowed to offer the federal loans but this school still awards the subsidized portion so I know that's not the issue.
 


mmmagique

Member
The first school was correct. Here is information on both types of loans. https://studentaid.ed.gov/types/loans/subsidized-unsubsidized
 

maneki

Member
Thank you for that link. Do you know if they are allowed to tell students otherwise? The application they require is quite extensive including how much you pay in bills, how much you currently earn, how much you anticipate earning upon graduation, other debts you will be repaying, and what you are requesting it for. I've never seen anything like it. And then they say it'll take up to 6 weeks for them to make a decision.
 

TheGeekess

Keeper of the Kraken
Thank you for that link. Do you know if they are allowed to tell students otherwise? The application they require is quite extensive including how much you pay in bills, how much you currently earn, how much you anticipate earning upon graduation, other debts you will be repaying, and what you are requesting it for. I've never seen anything like it. And then they say it'll take up to 6 weeks for them to make a decision.
You still have to fill out the FAFSA, no matter if it's a Stafford or not. :cool:
 

maneki

Member
I'm not talking about the FAFSA, I've already filled that out (and have for a few years now). This is a separate application this school requires if you want the unsubsidized portion of the Direct Loan.
 

TheGeekess

Keeper of the Kraken
I'm not talking about the FAFSA, I've already filled that out (and have for a few years now). This is a separate application this school requires if you want the unsubsidized portion of the Direct Loan.
Really. Must be your university, then. Mine doesn't require anything but the FAFSA and whatever hoops the Fed wants me to jump through (which includes 'counseling' via the Fed website). :cool:
 

maneki

Member
That's why I was so confused. I've never seen this before, nor have I heard of other schools requiring this. I feel really uncomfortable filling it out for them because I've already done the FAFSA, the entrance counseling, promissory note, etc. This is a two page application printed on school letterhead asking all these things. I am starting to think they are trying to scare students into not asking for the unsubsidized portion, but why?
 

maneki

Member
I just picked up the school's "Additional Loan Request Application" for the unsubsidized portion of my federal student loan. I am seriously still confused how they can do this. It is a three page application asking things like what I expect to make when I graduate, my spouse's income, my estimated budget (including estimated utilities, child care expenses, food costs, etc), why I want the loan, and three references. I don't see how they can require this when I've already filled out the FAFSA and been approved with a 0 EFC. And of course it says on each page that the request may be denied. I just don't understand this.
 

TheGeekess

Keeper of the Kraken
I just picked up the school's "Additional Loan Request Application" for the unsubsidized portion of my federal student loan. I am seriously still confused how they can do this. It is a three page application asking things like what I expect to make when I graduate, my spouse's income, my estimated budget (including estimated utilities, child care expenses, food costs, etc), why I want the loan, and three references. I don't see how they can require this when I've already filled out the FAFSA and been approved with a 0 EFC. And of course it says on each page that the request may be denied. I just don't understand this.
What did the financial aid office say when you asked them your questions?

It may also be a knee-jerk reaction if the university you're attending has a higher than usual default on student loans.
 

maneki

Member
Getting to talk to an actual financial aid adviser is pretty much impossible at this school. When you call or go in you are routed to a work study student. I did ask about it today when I picked it up and he (the work study student) said all he knows is what he's told to say and that if they (the advisers) say they can deny it then they must be able to deny it, and then shooed me out the door. The only time I've been able to ask questions at all of an actual financial aid adviser was when I first started at this school and had to go to a new student financial aid orientation (required by the school before they would release any funds). During that he also said unsubsidized loan requests are at their discretion and may be denied if they don't feel you can repay your debt after graduating (or several other reasons). I'm getting pretty nervous now. In the past I've requested to speak with an actual adviser and been told they'd call me. They never call.
 
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ajkroy

Member
Getting to talk to an actual financial aid adviser is pretty much impossible at this school. When you call or go in you are routed to a work study student. I did ask about it today when I picked it up and he (the work study student) said all he knows is what he's told to say and that if they (the advisers) say they can deny it then they must be able to deny it, and then shooed me out the door. The only time I've been able to ask questions at all of an actual financial aid adviser was when I first started at this school and had to go to a new student financial aid orientation (required by the school before they would release any funds). During that he also said unsubsidized loan requests are at their discretion and may be denied if they don't feel you can repay your debt after graduating (or several other reasons). I'm getting pretty nervous now. In the past I've requested to speak with an actual adviser and been told they'd call me. They never call.
I'm sure they want to know how you plan to pay back the loan, particularly with an EFC of 0. As you know interest begins accruing the month following signing the loan papers. If you default, the school can halt your access to educational resources and hold your transcript.

Unsubs usually have higher interest rates, unfortunately, so that debt rises quickly. With so many people crying foul out there who have ridiculous amounts in student loans, I would think you would be grateful that they are looking out for your welfare.

What's wrong with work study? What is your area of study?
 

maneki

Member
There is nothing wrong with work study but the students in the financial aid office aren't actually financial aid advisers. They are basically given a script and hand out paperwork.

Obviously they are wanting to know how I'll repay the loan since if I defaulted it would affect their default rate but as it was already stated in this thread by another poster, since the unsubsidized loan isn't need based I can't be denied so I'm trying to find out if they can legally deny me anyway. So far signs point to no but I have yet to find something specific I can point them too if they come back trying to deny it. If they want this application filled out for their records, fine (even though it feels very intrusive), but I don't see how they can say they may deny it if they actually can't.
 

ShyCat

Senior Member
Obviously they are wanting to know how I'll repay the loan since if I defaulted it would affect their default rate but as it was already stated in this thread by another poster, since the unsubsidized loan isn't need based I can't be denied so I'm trying to find out if they can legally deny me anyway.
Not being needs-based is not the same thing as undeniable.

So even if you don't have to prove need, you should still have to meet any other loan requirements. If they're convinced that you will be unable to repay the loan (based on such criteria as expected income prospects), the loan should be denied. It's a loan to be repaid, not a "gift". Who in their right mind would loan a large sum to someone who has few prospects of ever repaying it? Why should everyone else subsidize such an illogical underwriting decision by paying even higher interest rates? How many baristas with six-figure student loan debts do we need?
 

maneki

Member
Can you show me a link or something that states the school can deny the unsubsidized portion? Since the school isn't the one providing the loan I'm not sure how they get to be the ones to say yay or nay. I've been researching this issue outside of this forum too and so far everything shows that the school can't deny it outright if I qualify (taking at least half time credits, satisfactory academic progress, not over the annual or aggregate loan limit, etc). In fact the only thing I've been able to find about the school's involvement is "Your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive", which was then explained to me that it means if I'm only in school half-time, or receive scholarships, etc that affects the amount I can receive. Not that they can refuse to provide anything. I feel like I'm getting conflicting information and no one seems to know for sure. *sigh*
 

I'mTheFather

Senior Member
Here's one link regarding a refusal to certify the loan. It also says that the school must make sure you've applied for a Pell Grant before the unsubsidized loan is approved.

https://ifap.ed.gov/sfahandbooks/attachments/0304Vol8Ch2eligibleborrower.pdf

So, yes, they can refuse the loan under certain circumstances.

Or this: http://www.finaid.org/educators/pj/loancertification.phtml
 

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