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Personal Loan affect Financial Aid?

I am currently a grad student and I get both an unsubsidized and subsidized loan to pay for school (About $15,000 per year). With Christmas coming up I was thinking about refinancing a personal loan I have in order to help offset the cost of Christmas travel and presents, but was wondering if this will affect next semester’s financial aid? (I.E., not allowing me to borrow more money for school, or cutting down the amount I could borrow.) The personal loan is only for $2,000.

I have good credit and don’t have any huge loans out in my name, just this personal loan and a couple of small (under $500) credit cards.

Yes, these are Stafford loans.

As for the term “refinancing”, what it means is that I took out a loan for $2,000 from a private loan company a little over a year ago and have it almost paid off. I was basically going to borrow back the money that I paid off. :)


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2 Responses to "Personal Loan affect Financial Aid?"

  1. patticharron says:
    A personal loan will not affect your eligibility for student aid. You are borrowing for personal reasons. The only thing that will change on the FAFSA is your indebtedness.

    If someone were to give you $2000 and you were to sock it away in your savings account, that might have some effect as an asset. But a small personal loan is not an asset.

    Enjoy your holidays!

  2. NotAnyoneYouKnow says:
    The unsubsidized and the subsidized loans that you are currently receiving – are these Staffords or PLUS loans or private educational loans? The nature of your existing loans matters, because Stafford lending is not based on your credit score or credit history, but the PLUS loans and the private educational loans do require a lending analysis. Any time you add to your existing debt, that will have some impact on your credit score – which is partially based on both how much you owe, and how much you owe relative to the amount of available credit that you have.

    I’m not sure what you meant by intending to “refinance” your personal loan, because it sounds like “refinance” means “borrow more”. As I explained above, if you’re going to be using up a larger piece of your total available credit, that will impact your overall credit score.

    The issue, of course, is whether the change in your score will be large enough to affect the educational lenders’ willingness to lend you more money for school. Again – remember, if you’re talking about Stafford loans, you have nothing to worry about, because Stafford loans are not based on a credit analysis. If you’re talking about other kinds of loans, there’s no way anyone can say how “close” you are to the lenders’ lending criteria.

    I know that wasn’t much of an answer, but I’m not sure that anyone can tell you for sure. We’re not privy to all of your financial details, of course, and it’s not even clear who the lenders are that you will be working with.

    Good luck!

    Edit: Okay, then. If your loans are Staffords, your “other” loans will not impact your financial aid eligibility. The Stafford, itself, is not based on a credit check, and the EFC score that will be calculated from your FAFSA data will not reflect your debts, just your income and your assets.

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