Your questions answered

Today’s show answers listener questions and has followups about using federal student loans to pay off private student loans.
Kimberly writes: Yes, the federal loan can replace the private loan, and in most cases, aid administrators would reduce the private loan if adding the federal loan made the student have an overaward. We have one student who does this every year, but our costs are so high that she doesn’t totally pay off the private loan. She does end up with a smaller private loan at the end of the year since her federal aid covers some of what the initial private loan covered. It all depends on the cost of attendance, the student’s grade level and the directly billed costs. Make sense?
Gerrie writes: Usually the alt loan has to be taken into account in the cost of attendance. However if the cost of attendance is high enough that the student can take out the max Stafford as well as the amount of alt loan already borrowed, what that student does with the funds disbursed to him or her is up to them. As long as the student has maintained enrollment, you can retroactively award fall (taking into account the alt loan as a resource). However, if the COA is low enough it’s possible that the earlier alt loan could impact the total Stafford borrowed.
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