A school has a student with a Direct Subsidized Loan present in their financial aid offer. If it has not been accepted, can a student have other aid (state or institutional) that puts the student over their financial need, but still within their cost of attendance?
Yes, but only if an adjustment is made to the subsidized loan. If the student has been awarded, but has not accepted subsidized loan funds and other need-based aid is awarded which would put the student over need, the subsidized loan would be reallocated to unsubsidized loan. Assuming your school requires active confirmation, if at a later date the student still needs loan funds, the student can accept the unsubsidized loan. If the subsidized loan is accepted and other aid is awarded that would make the student over need, then the subsidized loan should be reduced if possible.
Please see the following from Volume 4, Chapter 3 of the 2022-23 FSA Handbook:
"Replacing Subsidized and Unsubsidized Loans
If a school discovers that a student received Direct Subsidized Loan funds in excess of need, the school must correct the error by replacing the excess subsidized amount with an equal amount of Direct Unsubsidized Loan funds if:
the student is still enrolled for the loan period, and
the school obtains the student’s agreement to accept the replacement unsubsidized loan amount.
If the student declines to accept the unsubsidized loan, the school must return the excess subsidized loan funds. If the error isn’t discovered until after the loan period is over, no action is required to eliminate the subsidized overaward."
Publication Date: 1/25/2023
Cost of Attendance: Cost of Attendance - January 2026
Developing the Cost of Attendance
Can We Include a 12-Month Housing Lease In the COA For Students Not Enrolled During the Summer?
Can a School Include Car Rental Costs In the Cost Of Attendance?
2024 New Aid Officer Training: Cost of Attendance Webinar Handout
New Aid Officer Training Webinar Series 2024-2025
New Aid Officer Training Webinar Series 2024-2025: New Aid Officer Training Webinar Series 2024-2025
Other Financial Assistance (OFA) and Changes in Emergency Aid
Prison Education Programs: Cost of Attendance Reference Sheet
College Board Trends Report Paints Changing Picture of College Cost
Is a Student Eligible For Federal Student Aid For Late Start Courses? (Award Year: 2024-25>)
Is a TEACH Grant Recalculation Required If a Student Begins Attendance In Some But Not All Classes?
NASFAA Virtual Conference Highlight: New Updates on FAFSA Simplification
Can a School Assume Housing Status When Packaging Students?
Must an Institution Annually Document How Cost Of Attendance Components Are Derived?
Will Housing Choice Be Included On the 2024-25 FAFSA? (Award Year: 2024-25>)
As More Institutions Announce Tuition Assistance for Low-Income Students, Barriers to Access Remain
NASFAA Warns ED of Implications of Removing Housing Question From FAFSA
When Publishing Our COA, Must We Break Out Meals By Breakfast, Lunch, and Dinner?
Are We Required To Break Down Less-Than-Full-Time Enrollment Statuses When We Publish Our COA?
Poll the Pros: FAFSA Housing Question Changes
Must We Use the Term "Living Expenses" Or "Housing and Food" When Referencing the COA?
Are There Limits On the Amount Of Federal Pell Grant Funds an Incarcerated Student Can Receive?
How Do We Determine the On-Campus Housing Allowance?
Can Sorority Or Fraternity Dues Be Included In the Cost Of Attendance?
Cindy H | 1/25/2023 10:52:37 AM
Robert, I totally thought the same thing! Wording it this way would make you think that if you did not review the files until after the semester is over then you are ok.
Robert V | 1/25/2023 10:30:02 AM
I am a bit troubled by the last sentence... "If the error isn't discovered...."
If the need overaward wasn't discovered until after the loan period, that would be an indicator of lack of administrative capability at the institution. However, if a scholarship or other form of aid does not arrive until after the payment period, the subsidized loan need overaward would be ok.
You must be logged in to comment on this page.