Your school's financial aid office gives you the chance to decline any portion of your financial aid award that you do not want. One of the most common awards to decline before disbursement is an unsubsidized loan, which is money on which you have to pay interest from the moment you borrow it. If, at a later time, you realize that you need the unsubsidized loan after all, you can reinstate it in most cases.
Unsubsidized Federal Student Loans
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Several types of unsubsidized student loans are available. The most common is the unsubsidized Stafford loan from the federal government, which has an interest rate of 4.99 percent for undergraduates and 6.54 percent for graduate or professional borrowers for any loans that are disbursed on or after July 1, 2022 and before July 1, 2023, per Student Aid.gov. The other major unsubsidized federal loan is the PLUS loan for graduate students and parents of undergraduate students.
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Neither of these have limited funds, so you can reinstate the loan after you decline it. Some states also offer unsubsidized loans to students who reside in the state. You should also be able to reinstate a state loan, but the rules will vary from one state to another. If you're wondering, "Should I accept an unsubsidized loan?," know that you can usually accept a student loan after declining, so don't feel you need to rush your decision.
How to Reinstate Your Loan
Wondering "How do I accept financial aid after declining"? Contact the financial aid office at your school as soon as you change your mind and want to get your unsubsidized loan after all. The staff will probably have you fill out a FAFSA, or Free Application for Federal Student Aid, form to request the loan again.
The loan funds will not arrive immediately, so if there is an impending due date for tuition or other bills for the college, discuss this with the financial aid office and see if there is anything you can do to avoid late penalties.
Loan Amount Limits
You can request an unsubsidized loan for any amount up to the maximum allowable by law. Stafford and PLUS loans both have an absolute maximum of the difference between the cost of attending your school and the amount of the other financial aid you have received. You can never borrow more than the cost of attendance.
Unsubsidized Stafford loans also limit your borrowing to a specific cap that ranges from $5,500 to $31,000 at time of publication. Student Aid.gov explains that $23,000 of this may be subsidized loans if you are an undergraduate. The cap is based on your year in school and whether or not you are considered a dependent student.
Private Student Loans
Private student loans are almost always unsubsidized, but reinstating a loan after you have declined it is a much more complicated process. Approval for a private loan requires an application and credit check, and once you have declined a loan, you must start the process all over again. You are not guaranteed to be approved for the amount or interest rate you were offered the first time.
Before taking out a private student loan, it's essential you research the loan's terms. You'll need to fully understand what you are signing and what the payback requirements are. This will help you to avoid problems down the line like default or late payments.