Why do scholarships lower the amount my daughter is able to borrow from Stafford Loan?

Answer 1

Think of it this way... there is a limited amount of Stafford Loan money to go around. Therefore, schools have to decide how to divide the Stafford Loan money that they are going to give out to their students. Your daughter now has additional resources to pay for her education so the Stafford Loan money is now made available to someone who does not have those resources.

Your daugther is still much better off since her Stafford Loan (money you have to pay back later) is replaced by a scholarship (which is essentially free money). You should check out your school's Outside Scholarship Policy to better understand how scholarships affect the financial aid package.

Congratulations to her on winning a scholarship!

Some sites that have some great financial calculators to help you with the process are:

http://www.CollegeToolkit.com
http://www.FinAid.org

Answer 2

The loan is based on financial ability.. if she has more available finances, they take that into consideration when calculating the loan amount. If she gets a 1500$ scholarship.. they say " There's 1500$ more that we don't have to give her"

Besides, losing the scholarship amount on a loan is more beneficial for her in the long run.. that 1500$ would be 3 more years. or another 100$ per month added to her repayment schedule.

Answer 3

Because they know, by seeing what she is getting from the scholarship, how much she should need in loans that she didn't get from the scholarship. It's actually to help you out, in a way, because they could give you as much as you wanted, but, you'd have to pay it all back, when you wouldn't need the extra money.

Answer 4

The loan is based on how much you need for your courses and how much is needed for living costs. If you have a money paying for the courses then all that is left is living costs.