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In general, it makes sense to take out federal student loans before borrowing private loans. Federal loans usually have lower interest rates, more generous repayment terms and certain benefits, such as income-driven repayment plans. But in some situations, you might lose federal financial aid eligibility and be unable to take out federal loans.
However, losing your student loan and financial aid eligibility does not mean you are out of options. You may be able to get financial aid back after a suspension by taking action right away.
To be eligible for federal loans, you must be a U.S. citizen or eligible noncitizen and have a valid Social Security number. To receive loans, you need to enroll in an accredited institution and show academic progress. You also will need to show proof that you completed high school, such as submitting your diploma or General Educational Development (GED) certificate.
But even if you meet these requirements, you can still lose your financial aid eligibility. Below are five common reasons you could lose aid, along with tips on how to get financial aid back after a suspension.
1. Your student loans are in default
If you defaulted on your federal loans and are now planning to go back to school, you’ll need to get out of default before the government will allow you to take out new loans.
Your federal loans are considered in default if they are overdue by 270 days or more. To get out of default, you must either pay your loans in full or apply for rehabilitation or consolidation.
To rehabilitate your debt, federal regulations require you to make nine consecutive on-time payments within 10 consecutive months. Alternatively, you can apply for a Direct Consolidation loan and agree to an income-driven repayment plan.
Once you’ve gotten your student loan back into good standing, you should regain financial aid eligibility. You might also see a big improvement in your credit score, which could help you qualify for student loan refinancing in the future.
2. Your grades have slipped
To maintain financial aid eligibility, you need to show satisfactory academic progress (SAP). One measure of SAP is your grades. The government requires students to maintain at least a C grade-point average, but some schools have their own standards as well.
Additionally, you have to demonstrate that you’re on track to graduate. Federal regulations state that you must complete your degree within 150% of the program’s time frame. For example, if you are pursuing a bachelor’s degree, you would need to complete the program in six years. If it were to take longer than that, you would be ineligible for federal aid.
If your grades start slipping and you lose access to federal student loans, you may be able to get them back. You can file an appeal directly with your school explaining why your grades slipped. In extenuating circumstances, such as an illness or death in the family, the school can reestablish your eligibility.
In other cases, you might be put on academic probation. From there, you can submit an academic plan and explain how you plan to improve your grades. You might include how you’ll work with a tutor, join a study group or take a remedial course. The school can make you eligible for federal aid again as long as you adhere to the academic plan.
3. You were convicted of a drug offense
If you lose financial aid because you were convicted of a drug offense, you might be able to regain it. To become eligible, you can complete an approved drug rehabilitation program or pass two random drug tests administered by a drug rehabilitation company.
Once you complete these requirements, you can contact your financial aid office and get back the federal aid you need.
4. You accidentally received too much student aid
If you received more federal aid or grants than you were supposed to get, you may become ineligible for future loans. Even if it was a mistake on the lender’s part, you bear the responsibility to fix it.
In most cases, you need to repay the excess amount to regain your financial aid eligibility. You can pay it back all at once, or, if doing so would be a hardship, you can set up a repayment plan. Once you’ve repaid the amount, you will be able to get federal aid.
5. Your citizenship status has changed
If your citizenship status expired or was revoked, you could lose financial aid eligibility. The only way to get it back would be to reestablish your previous qualifying status or become a U.S. citizen.
For more information about this process, contact U.S. Citizenship and Immigration Services.
If you’ve lost federal financial aid due to the reasons discussed above, you can take steps to fix the situation. Unfortunately, there are a couple of scenarios in which you might lose aid and can’t get it back.
Your family’s income has increased
You might lose some aid if your family has started making more money. You submit the FAFSA every year, so Federal Student Aid will see if your family’s income has increased or your parents have been pushed into a higher tax bracket.
Although a high income won’t disqualify you from borrowing unsubsidized student loans, you could lose access to need-based aid, such as subsidized student loans, grants or work-study. In this situation, you can keep applying for merit-based scholarships and grants, or borrow unsubsidized federal loans or low-rate private student loans. But since your income has increased, you probably won’t be able to regain eligibility for need-based aid.
Your financial aid package has changed
You might also be out of luck if your school adjusts your financial aid offer when you become an upperclassmen. Some colleges “front-load” financial aid offers, meaning they give more aid to first-year students to entice them to enroll.
But they might not offer as much to sophomores, juniors or seniors. Since your financial aid package can change from year to year, make sure to go after scholarships or loans early to ensure you don’t run out of money during college.
You can also try appealing to the financial aid office, especially if they didn’t take certain factors into account, such as emergency medical bills or a death in the family. If the adjusted costs are too great, you could also consider transferring to a cheaper school.
If you’ve lost your eligibility for student loans, contact your school’s financial aid office about how to get financial aid back after a suspension. In many cases, you become eligible again after taking a few simple steps.
At the same time, make sure to apply to scholarships for all four years of college, even if you’re receiving financial aid. By earning money for college, you can protect your finances and avoid taking on too much student debt.
And if you do need to borrow from a private lender to fill a funding gap, make sure to shop around for the most affordable student loans.
Rebecca Safier contributed to this report.
Need a student loan?Here are our top student loan lenders of 2020!
|1.24% – 11.44%1||Undergraduate, Graduate, and Parents|
|1.25% – 11.15%*,2||Undergraduate and Graduate|
|1.24% – 11.98%3||Undergraduate, Graduate, and Parents|
|1.24% – 12.49%4||Undergraduate and Graduate|
|1.80% – 11.89%5||Undergraduate and Graduate|
|2.71% – 12.99%6||Undergraduate and Graduate|
|3.52% – 9.50%7||Undergraduate and Graduate|
|* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers. |
1 Important Disclosures for Earnest.
2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
3 Important Disclosures for College Ave.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 9/1/2020. Variable interest rates may increase after consummation. Lowest advertised rates require selection of full principal and interest payments with the shortest available loan term.
4 Important Disclosures for Discover.
Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.
5 Important Disclosures for SoFi.
UNDERGRADUATE LOANS: Fixed rates from 4.23% to 11.76% annual percentage rate (“APR”) (with autopay), variable rates from 1.90% to 11.66% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.13% to 11.83% APR (with autopay), variable rates from 1.80% to 11.73% APR (with autopay). MBA AND LAW SCHOOL LOANS: Fixed rates from 4.30% to 11.98% APR (with autopay), variable rates from 1.97% to 11.89% APR (with autopay). PARENT LOANS: Fixed rates from 4.60% to 11.26% APR (with autopay), variable rates from 1.90% to 11.16% APR (with autopay). For variable rate loans, the variable interest rate is derived from the one-month LIBOR rate plus a margin and your APR may increase after origination if the LIBOR increases. Changes in the one-month LIBOR rate may cause your monthly payment to increase or decrease. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 07/10/2020. Enrolling in autopay is not required to receive a loan from SoFi. SoFi Lending Corp., licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org).
6 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicant’s ability to supply the necessary information for submission.
7 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.17% effective Sep 1, 2020 and may increase after consummation.