If I Decline a Subsidized Loan, Can I Change My Mind?
Decided against a subsidized loan but had second thoughts? Discover if you can re-accept it and the steps involved in reversing your financial aid decision.
A subsidized loan is a type of federal student loan designed for undergraduate students who demonstrate financial need. The primary benefit of these loans is that the U.S. Department of Education pays the interest that accrues while the student is enrolled at least half-time, during the six-month grace period after leaving school, and during periods of deferment. Many students face decisions about accepting or declining financial aid offers, and sometimes, circumstances change, leading to a desire to reconsider initial choices.
The Initial Decline Process
Students typically decline a subsidized loan through several common methods. Often, the university’s financial aid portal provides an option to accept, decline, or reduce the awarded loan amount directly. This online process allows for active selection of financial aid components.
Alternatively, a student might decline a loan by simply not accepting the award presented in their official financial aid offer letter. Direct communication with the financial aid office, either in person, by phone, or through email, can also be used to decline funds.
Reversing a Declined Subsidized Loan
Reversing a decision to decline a subsidized loan is often possible, subject to the specific policies and deadlines of the student’s educational institution. Most financial aid offices understand that financial circumstances can change and have procedures to address such requests.
To initiate the reversal process, the student should gather specific information. This includes their full name, student identification number, the exact type of loan (e.g., Direct Subsidized Loan), the relevant award year, and the specific amount they now wish to accept.
The primary point of contact for re-accepting a declined loan is the university’s financial aid office. Students should contact this office promptly, as institutional and federal deadlines for accepting or reinstating aid exist. These deadlines vary by school and academic term.
The financial aid office will provide guidance on the necessary steps, which may involve completing a specific “loan change request” form or re-accepting the loan through an online portal if the acceptance window is still open. These forms require the student to specify the amount they wish to accept. Upon submission, the financial aid office will process the request, which may take a few business days.
Key Considerations After Reversal
Once a declined subsidized loan has been successfully re-accepted, several steps are involved before funds become available. For first-time federal student loan borrowers, two requirements must be completed: Entrance Counseling and signing a Master Promissory Note (MPN).
Entrance Counseling is an online session ensuring the borrower understands their loan’s terms, rights, and responsibilities. The MPN is a legal document where the borrower agrees to repay the loan and any accrued interest and fees. Both can be completed on the Federal Student Aid website, StudentAid.gov.
Loan disbursement usually involves the funds being sent directly to the school. The institution then applies the loan amount to the student’s account to cover tuition, fees, and other direct educational charges. Any remaining funds are disbursed to the student as a refund.
Students should monitor their university’s financial aid portal and student account for updates regarding the processing and disbursement of the re-accepted loan. The total aid package cannot exceed the school’s determined cost of attendance.