BLOG  POST By Melvin Monette-Barajas, President and Executive Director of Indigenous Education, Inc. The home of the Cobell Scholarship.

WHEN TO DECLINE A STUDENT LOAN: TALK TO A FINANCIAL AID OFFICER

Most students with whom I work receive a financial aid award letter indicating a variety of income sources – Pell Grant, state grant, tribal scholarship, other scholarships, campus-based aid, work study, and student loans. Student loans are becoming more common in recent years. It has been said that very few 21st Century students will graduate with no loan debt. But, understanding how to minimize that debt will prove beneficial once you graduate and begin your career. Your financial aid officer will always give you the best advice for your situation.

DECLINE IT ALL It’s critical to know that you don’t have to accept the loan at all. If you are certain that other sources of aid will cover your full and immediate costs, then decline the loan. How you decline it varies by institution. But you must be certain to follow up with each of those other funding sources to make sure they arrive on campus in time to cover the bills. You don’t want to receive a “disenrolled” notice because you didn’t follow up.

DECLINE A PORTION Perhaps you don’t need the full amount you are being offered. You can usually tell the financial aid office that you only want to borrow a specified amount. This will reduce your collective loan debt in the end. You can always decline the “excess” portion to be returned to the lender. This is usually a form or meeting with the office of financial aid.

BORROW LATER Additionally, you may run across unexpected costs later in the term or the year. So long as you still have room in your budget (check with the office of financial aid), you can borrow only what you need to cover those expenses at the time. This is especially critical if you are borrowing unsubsidized or private loans that may begin accruing interest immediately.

REDUCE LOANS ALREADY PROCESSED Sometimes, an unexpected scholarship or other aid is offered to you after you have accepted or received your loan. This could put you in an “over-award” situation. If you work with your office of financial aid, most will return the amount of scholarship or other aid back to the loan provider on your behalf. This is often called loan displacement. This will create a bill in the same amount for the student. Then, the scholarship or other aid will be applied to the bill. You may not see the benefit of this in your bank account, but once you graduate, your combined debt will be less.

FINALLY If you must take out a loan, remember that a federally-subsidized loan is the most desirable of loans. Interest often does not begin to accrue until you graduate. Private lender loans are the least desirable as they often require some form of payment immediately. Loans are confusing but easy to get so be certain to read the fine print, ask a lot of questions, keep an open line of communication with the office of financial aid and borrow only what you need. Your future self will thank you.

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