Fellowship Funding and Student Loan Eligibility

[jprufrock]

I just got a letter in the mail today that said I'm eligible for the maximum student loan amount based on my FAFSA data. I'm wondering if my 5-year fellowship will make me ineligible to receive a student loan (namely, the subsidized Stafford loan). My fellowship consists of full tuition/fee remission, health insurance and a yearly stipend of ~$23,000. Given this, I probably won't need to take out any student loans, but having the interest-free subsidized loan may be an attractive option to have more liquidity and to build credit.

I will definitely not take out an unsubsidized loan. However, the subsidized student loan of $8,500 for which I'm eligible looks really attractive because it does not accrue any interest while I'm attending school (aside from the 1% origination fee). I can see myself making really good use of that money on top of my fellowship by setting it aside in an interest-baring savings account dedicated to rent or other living expenses.

I know that eligibility for loans is something like Cost of Attendance - awards/fellowships/EFC. Given that my program has essentially fully taken care of the cost of attendance, does that change my eligibility? Or, if I've already been declared eligible for the subsidized loan, can I just take it to have this financial buffer and build my credit? Since I have full tuition remission, is it correct to assume the university will forward the entire sum of the loan to me? Please note that I plan to pay off the loan in full upon graduation, effectively avoiding paying any interest.

Any thoughts, advice, experience, knowledge?

Other info: I'm not requesting opinions on whether or not to take a student loan, even if I don't necessarily need it. I have 0 undergrad debt, and a tidy amount of savings (enough to get by without a loan), but I'm really interested in taking this loan since it accrues no interest and I plan to pay it off in full upon graduation. Essentially, I'm hoping to be able to use it as a buffer that can earn passive savings while I keep it in an account to pay for student expenses. Feel free to discuss ethical concerns about this, though.

Edited June 1, 2011 by jprufrock

[abinclane]

I don't actually know what to say since you don't want any opinion to what you are going to do. Just probably wanna say good luck.

[jprufrock]

Sorry--maybe it isn't clear in my initial post. I want to know if my fellowship funding will make me ineligible for the subsidized student loan for which I was approved.

EDIT: Or if the fellowship funding will reduce the amount of the loan I may receive.

Edited June 2, 2011 by jprufrock

[nataliedread]

I'm fairly certain that your fellowship will not make you ineligible for the subsidized student loan, nor will it reduce the amount of the loan. I am taking out a small amount of loan money on top of my fellowship to cover living expenses. Also, my brother-in-law is ABD at Case Western and he had to take out student loans in addition to his fellowship for most of his grad school.

[ecko2004]

I'm glad someone asked the exact same question i'm wondering.

I have a Federal Fellowship (not sure if that matters) and, like the OP see that i'm eligible for a federal direct subsidized loan. If the cost of the fellowship ~$30,000/yr is taken into consideration when doing the CoA I would think I wouldn't be eligible to receive anything.

Maybe some others can shed some light on the situation.

[ecko2004]

Nevermind...searching does a body good.

In short, yes we're eligible