Scholarships and loan repayment

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Rudy

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Dec 22, 2022
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My daughter has a few scholarships that will be paid directly to her and that she can use for the advanced pay loan payments.

How does this work? Will the scholarship amount be applied to the entire amount owed, and then the remaining amount owed recalculated and spread out over the 2 years? Something else?

Thank you!
 
There are many threads on this subject. It depends on how the scholarship is designated. If it is paid directly to her, she most likely is not obligated to send it to the academy.
Both of my DD earned scholarships with funds sent directly to them in their name. They have used those funds as they see fit. They both chose to start a Roth IRA with a large portion of those funds. Once a young person enters the academy Cadets and Midshipmen have earned income, and qualify to contribute to an IRA. I personally would not send these funds to an academy to manage or apply towards the ACE loan. Those that have had experience sending funds to an academy, on behalf of their mid/cadet, to apply towards the ACE loan may have a different perspective. Congrats to your DD and Good Luck!
 
Rudy said:
My daughter has a few scholarships that will be paid directly to her and that she can use for the advanced pay loan payments.

How does this work? Will the scholarship amount be applied to the entire amount owed, and then the remaining amount owed recalculated and spread out over the 2 years? Something else?

Thank you!
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Can't comment on the specifics of how the repayment would work, but do note that scholarships cannot have any GPA/good standing stipulations attached. The academy only accepts "no questions asked" scholarships.

See page 44 (page 53 in the actual document) of the 2027 appointee handbook. Lays it all out much more concisely than I could and it's a primary source.
 
Thank you! We will look into her various options and figure out what to do.
 
The advance of pay is an "interest free government loan". There's no point in paying it off early.

You'd be better suited putting the scholarship money "to work" somewhere else.
 
You might want to check with the scholarship provider, and ask if they can be used for a Service Academy student. Put the decision on the issuer. My son had a couple, and they could not.
 
Gabe_ said:
There are many threads on this subject. It depends on how the scholarship is designated. If it is paid directly to her, she most likely is not obligated to send it to the academy.
Both of my DD earned scholarships with funds sent directly to them in their name. They have used those funds as they see fit. They both chose to start a Roth IRA with a large portion of those funds. Once a young person enters the academy Cadets and Midshipmen have earned income, and qualify to contribute to an IRA. I personally would not send these funds to an academy to manage or apply towards the ACE loan. Those that have had experience sending funds to an academy, on behalf of their mid/cadet, to apply towards the ACE loan may have a different perspective. Congrats to your DD and Good Luck!
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I repaid the loan...don't regret the decision. It certainly gives you a little more independence and flexibility financially during your first few years.
 
There are at least 3 possible ways that scholarships are distributed and it depends on the person/company/group that is awarding the scholarship.
1) Directly to the recipient. In that case, I would not bother sending to the SA.
2) Scholarships that are designated for tuition only. Those can not be used at an SA since your child is not paying tuition.
3) Scholarships that are paid directly to the SA (or college) but are not designated for tuition only. In that case, those can be used to help pay off the loan.
 
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