How does Federal Work Study affect Stafford loans?

My daughter finally received an offer for federal work study (she's a
sophomore), but it states that it may result in a change in her
existing loan amounts. Her estimated cost of attendance is about
18000, and she is receiving a Stafford loan (no other grants or loans)
for the max for her sophomore year. She (we) need every penny to get
her through school. Is it likely that her stafford loan will be
reduced if she does Work Study?

thx!

If she is receiving the max sophomore Stafford loan of $3,500 and they
give her work-study, the worst it should do is convert some of that
need-based subsidized (interest free) loan to an unsubsidized (not
interest free) loan. But she should still keep a loan total of $3,500.

If her Cost Of Attendance is $18,000, she is eligible for need-based aid
up to the amount by which the COA exceeds her EFC on the FAFSA results.

For example, if the EFC is $12,000 then she can get up to $6,000 in
need-based aid. That leaves room for up to another $2,500 ($6,000 minus
$3,500) in work study that she could receive without affecting the loan
type.

But if they gave her $3,000 in work study they would have to take back
$500 of the subsidized Stafford loan, and then re-issue that $500 as
unsubsidized.

In other words, you won't lose anything of the loan, and she'll have a
chance to earn some work money as well.


Steven B. Blank
College Financial Aid Consultants
29 Ives Hill Court
Cheshire, CT 06410
(203)250-7761


On 8/20/2006 10:29 PM, wrote:

> My daughter finally received an offer for federal work study (she's a
> sophomore), but it states that it may result in a change in her
> existing loan amounts. Her estimated cost of attendance is about
> 18000, and she is receiving a Stafford loan (no other grants or loans)
> for the max for her sophomore year. She (we) need every penny to get
> her through school. Is it likely that her stafford loan will be
> reduced if she does Work Study?
>
> thx!
>