Federal Direct PLUS Loan Q...

[orangeray]

So in hopes that someone out there happens to be a Dir PLUS Loan expert, I had a question:

As it turns out, I borrowed too much money. I'm a first-year grad student and I JUST started school. I found out that I wouldn't be charged full-time tuition, but rather part-time tuition. So the PLUS loan I took out was totally unnecessary (which I guess is good)! Can I "give" that money back/cancel the loan? For obvious reasons, I'd rather not hold on to that money; I really don't want to borrow any more than what I need.

[newage2012]

If the loan has credited / disbursed into your account within the last 30 days, your school can cancel it and return it. Just contact your school's financial aid office on how to do this.

If the loan is disbursed for more than 30 days but within the last 120 days, you need to contact the Direct Loan service center on how to do this.

For both cases above, you are NOT responsible for interest and origination fees.

If it is more than 120 days, you are out of luck and you have to keep the money and responsible for interest and origination fees. If this is the case, I suggest use the money to open an Traditional Individual Retirement Arrangement (Traditional IRA) account at your bank (if they offer this) or most stock brokers. This will give you a huge tax savings. You can contribute up to $5000 annually to the IRA.

Or better yet, use the loan proceeds to pay off your current credit card debt first.