Grad Students Scramble to Reverse Unnecessary Loans Loyola Accepted on Their Behalf

Zack Miller | Loyola PhoenixLoyola accepts loans on students’ behalf and allows them to adjust their financial aid within 30 days of its disbursement; however, this came as news to grad students who had never sanctioned them in the first place.

A number of Loyola graduate students noticed the university accepted student loans they didn’t need on their behalf just days before the fall semester started. Loyola officials said this is standard practice, and students can adjust or remove loans added to their account up to a month after the loan was accepted.

Loyola graduate student Claire Lockard filled out a Free Application for Federal Student Aid (FAFSA) — a form used to apply for federal financial aid for higher education — earlier this year because it was required in order to access the COVID-19 aid provided to college students by the federal government in the CARES Act

Lockard, a 27-year-old philosophy Ph.D. student, already had her tuition paid and didn’t need a loan. But when FAFSA showed the school she was eligible for one, Loyola accepted it on her behalf — only removing it after four days and a few phone calls to the Financial Aid Office from Lockard. 

“I was shocked that without my consent, they were putting me into student loan debt I don’t need,” Lockard said. “It’s just wild to me because I didn’t even have a balance on my account that would’ve required money to pay, so I don’t understand why that would be the policy.” 

Assistant Vice President and Director for Loyola’s Financial Aid Office Tobyn Friar said Loyola automatically accepts all Federal Stafford Loans on students’ behalf due to its “passive acceptance policy,” then notifies students via email and gives them 30 days to adjust the loan as they see fit. Friar said this has always been Loyola’s policy. 

Before the Federal Stafford Loans can be disbursed, new students must complete the Federal Stafford Loan Master Promissory Note (MPN) — the legal commitment to repay loan funds — and Entrance Counseling (EC) to inform students about what to expect when taking out loans. The Master Promissory Note is completed once for each type of loan a student takes out through the U.S. Dept. of Education after a student fills out FAFSA and doesn’t have to be re-submitted each year.  

“I was shocked that without my consent, they were putting me into student loan debt I don’t need. … I don’t understand why that would be the policy.”

Claire Lockard, graduate student

Megan Wines, another 27-year-old graduate student Loyola accepted an unnecessary loan for, told The Phoenix she never filled out the Federal Stafford Loan MPN and was startled to see a $10,000 loan disbursed to her account the week before the fall semester started.

Wines, a third-year Ph.D. student studying theology, was also able to get the loan removed from her account, but said she spent an entire morning figuring out what happened and how to fix it. 

“It sounds like it’s all gonna work out, but it’s just a lot of paperwork and extra stuff to work out while I’m trying to prep for the classes I’m assisting and studying for Ph.D. comprehensive exams in October and rushing to get ready for the beginning of the semester,” Wines said.  

Friar said it’s impossible for a federal Stafford loan to disburse to a student account unless the student completed both the MPN and the EC. However, he said the MPN and EC remain active for ten years. Wines said she used a loan to partly finance her Masters education at Loyola. 

“The MPN is active for 10 years, so if a student completed the MPN as an undergraduate student and then continued at Loyola for a graduate or professional degree then they would not need to complete a new MPN or EC,” Friar said. “Only new or first-time Stafford loan borrowers at Loyola would have to complete the MPN and EC. Again, they would only do this once unless their previous MPN expired.”

About 92% of students receive financial aid to attend Loyola, according to the university’s website. Students can access their financial information in LOCUS — under the Financial Aid tab — to adjust any financial aid awards accepted on their behalf, Friar said.  

“If the student wants to decline all or reduce their loans, they still have an opportunity to do so and must do this within 30 days of disbursement,” Friar said in an email to The Phoenix. “The Financial Aid Office recommends that students always review their financial aid awards closely and determine what they do or do not want disbursed before the specified disbursement dates for their specific programs.”

Lockard said she’s concerned younger students who are less experienced with financial aid might not realize loans were accepted on their behalf or understand how to reverse them.

“I’m still left feeling confused and taken advantage of by the university because I don’t understand why it’s in their interest to give out student loan debt,” Lockard said. “That puts the onus on graduate students, who are busy, to take that upon ourselves and take on a whole other task to navigate in addition to everything else.”  

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