Can you take out loans for an amount covered by a scholarship?

[restlessdriven]

I'll be attending med school next year with a substantial amount of undergrad debt. I have both federal and private loans. I know my federal loans will be deferred again but I'm not counting on that for the private loans. I've spent some time looking at my loan terms and they're not promising. Per month, my private loan payments total about $850. If I can't get them deferred again, I'm worried about how I'll continue paying them in med school. I do plan to live with multiple roommates, walk rather than drive (although I'll still have a car and will have to pay insurance which is not included in COA) and live frugally. Even with cutting costs within my cost of attendance, I'll still be short of being able to cover those private loans.

My question is this: If I receive for instance, a 15K scholarship for the year from my school, can I still take out that 15K in loans? Is this school dependent? I definitely don't want to break any rules. I just don't know what my options are if I can't defer. Thanks for your time!

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[RangerBob]

It's likely school dependent, but I'm pretty sure you cannot. However, I would ask the financial aid director at the school you end up matriculating at.

Most private loans can be deferred during medical school--I was able to defer most of mine. I did have one that entered repayment (it was something like $100/month--not too bad). My school did allow me to ask for a budget increase to cover that extra payment (reasonable car payments and other things could also be used in the budget increase). At schools that allow this (talk with the financial aid director), you just have to submit a letter and proof of those expenses and then you can take out the additional funds if they approve. If you got a scholarship for $15k, that usually means that you could take out those additional funds in federal loans (if you borrowed the maximum already, then often you would have to take out a private loan for the additional expenses).

I remember one of my loans from my post-bac days technically wasn't supposed to be eligible for a deferment, but I just talked with the bank and they gave me a deferment. So it never hurts to talk with your lender. Just make sure you know the terms of the agreement--sometimes you lenders actually try to say you have less favorable terms than you really have. Sometimes you get a really helpful and educated person on the other line, other times you get someone that really doesn't know the difference between all the different loan products they offer.

 

[restlessdriven]

It's likely school dependent, but I'm pretty sure you cannot. However, I would ask the financial aid director at the school you end up matriculating at.

Most private loans can be deferred during medical school--I was able to defer most of mine. I did have one that entered repayment (it was something like $100/month--not too bad). My school did allow me to ask for a budget increase to cover that extra payment (reasonable car payments and other things could also be used in the budget increase). At schools that allow this (talk with the financial aid director), you just have to submit a letter and proof of those expenses and then you can take out the additional funds if they approve. If you got a scholarship for $15k, that usually means that you could take out those additional funds in federal loans (if you borrowed the maximum already, then often you would have to take out a private loan for the additional expenses).

I remember one of my loans from my post-bac days technically wasn't supposed to be eligible for a deferment, but I just talked with the bank and they gave me a deferment. So it never hurts to talk with your lender. Just make sure you know the terms of the agreement--sometimes you lenders actually try to say you have less favorable terms than you really have. Sometimes you get a really helpful and educated person on the other line, other times you get someone that really doesn't know the difference between all the different loan products they offer.

Thanks for the reply! I think the school I'm leaning towards right now is vey strict on not exceeding COA as a state school. After more research, it looks like one of my lenders won't defer. The other loan is actually kind of a personal loan through a bank but the bank is amazing, giving me some hope that payments can at least be reduced. I'll also be receiving GI Bill benefits so I'm hopeful that the living allowance won't count toward financial aid. Nevertheless, I'll certainly contact the veterans affairs office at my school and each of the loan offices. Thanks for the hope and sharing your story!