Yes, it is usually worth it. The unsubsidized loan will still come with a lower interest rate than private loans. You might think ``I don't need the money this year,'' but you are limited to how much you can take it in a given year.
Federal Direct Loans
If you are awarded Federal Direct Subsidized or Unsubsidized loans, each loan must be accepted or declined. ALL of a Subsidized Loan must be accepted before accepting any portion of an Unsubsidized Loan.
Since the aid options are being offered to you, you have a choice in what you decide to accept. For example, if you do not want to accept a scholarship, work-study grant or a loan you were offered, you have the ability to decline.
You may reduce or cancel a Direct Unsubsidized Loan online via your myUMBC account if it has not yet disbursed. If the loan has already disbursed, you should complete the Loan Decrease/Cancel Request Form no later than 14 days after you receive notification that your loan has disbursed.
If you default on your student loan, that status will be reported to national credit reporting agencies. This reporting may damage your credit rating and future borrowing ability. Also, the government can collect on your loans by taking funds from your wages, tax refunds, and other government payments.
Remember: any unused student loan money is still part of your loan and must be repaid. You are responsible for paying interest on the unused funds, even if you don't use them at the original disbursement date.
What happens to the leftover financial aid money? Well, that depends on you and how you want to handle it. In general, you'll receive a refund. You can then decide whether to send the money back or keep it and use it for future educational expenses.
Students selected for verification of their FAFSA form may wonder, “Does FAFSA check your bank accounts?” FAFSA does not directly view the student's or parent's bank accounts.
You can decline a loan. You should only borrow what is needed. If your living expenses aren't going to be as high as the amount estimated by the school, you have the right to decline (turn down) the loan or request a lower loan amount.
Drawbacks of Unsubsidized Student Loans
You're responsible for paying the interest on that loan from day one. Unsubsidized loans are not the worst loans you can borrow in terms of pure cost and the interest rate that you'll receive. However, the interest accumulates even before you enter repayment.
After your loan is disbursed, you can cancel all or part of it by notifying your school within certain timeframes that vary depending on your school's processes (your school will tell you the specific cancellation timeframe that applies to you), or by returning some or all of the loan money to your servicer.
Both Direct Subsidized Loans and Direct Unsubsidized Loans are offered to students regardless of their credit history and neither will result in a hard inquiry. A Direct PLUS Loan, however, does require a credit check, so if you're considering one, your credit scores may take a slight hit.
You have the right to turn down a loan or to request a lower loan amount. If you accept less than the full amount of the loan you're offered, you can increase the amount (up to the offered amount) within the school year.
There is no deadline to accept your financial aid awards. If you have grants or scholarships, the Office of Financial Aid will automatically accept these awards on your behalf.
If you accept a loan and realize that you don't need it, the good news is you can cancel the loan, or a portion of it, within 120 days of disbursement. By canceling the loan, you'll return the money you received, and you won't owe any interest or be charged any fees.
The student should keep no cash or cash equivalents saved in their name. Students are punished by the FAFSA for saving any cash. The FAFSA will specifically ask “As of today what is the cash balance of checking, savings…” accounts for the student.
HOW THE FAFSA LOOKS AT INCOME. The FAFSA requires parents and students to report income from two years prior to the school year for which financial aid is being requested. For example, if you plan to start college in the fall of 2023, you will provide income information from your 2021 tax return or W-2 tax form.
The FAFSA gives a parental asset protection allowance between about $30k and $50k. So, if your parents don't have more than that in assets, these resources won't be counted anyway. And above that threshold, it's only about 5-6% of the net value of the parental assets that count toward your EFC.
You don't need to accept all the student loans that are offered to you, and you can request a lower loan amount than what you are eligible for. If you end up needing more funds in the future, you can talk to your school's financial aid office.
Any money left over is paid to you directly for other education expenses. If you get your loan money, but then you realize that you don't need the money after all, you may cancel all or part of your loan within 120 days of receiving it and no interest or fees will be charged.
Your Pell Grant refund can be paid out directly to you once your institutional educational expenses are all paid. Once you've received the payment, you can choose to do whatever you'd like with it. However, you'll get the best bang for your buck if you spend it on other educational expenses.
You'll also be eligible for student loan forgiveness on any remaining balance after the repayment period ends. This is usually after 20–25 years. Both direct subsidized and unsubsidized loans are eligible for any of the four IDR plans.
You must start paying back your loan after you graduate, leave school, or drop below half-time enrollment.