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In general, it makes sense to take out federal loans over private loans. They usually have lower interest rates, more generous repayment terms, and you get access to benefits like income-driven repayment plans. But in some situations, you might lose federal financial aid eligibility and be unable to take out federal student loans.
However, if you lose your eligibility for federal student loans, that does not mean you are out of options. You may be able to regain access by taking action.
Student loan requirements and financial aid eligibility
To be eligible for federal loans, you must be a valid 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 will also 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 eligibility. Below are four common situations and how to regain eligibility.
Defaulted on student loans
If you defaulted on your federal loans, and are now planning to go back to school, you need to get out of default before the government will allow you to take out new loans.
Your loans are considered in default if they are overdue for 270 days or more. To get out of default, you must either pay your loans in full or enter a rehabilitation program. Alternatively, you can consolidate your loans with a private lender, paying back the federal loans in full.
To rehabilitate your debt, federal regulations require you to make nine consecutive on-time payments within ten months. Once you have completed the ten months of payments, your credit will improve, and your account will be back in good standing, regaining your financial aid eligibility.
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 are on track to graduate. Federal regulations state that you must complete your degree with 150 percent 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 took 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, death in the family, or other situation, the school can reestablish your eligibility.
In other cases, you can at least be put on 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.
Convicted of a drug offense
According to the National Center for Policy Analysis, one in 400 students is rejected for federal student aid because of a drug conviction.
If you lost your financial aid eligibility because of a drug offense, you might be able to regain it early. To become eligible, you can complete an approved drug rehabilitation program or pass two random drug tests handled by a drug rehabilitation company.
Once you complete these requirements, you can contact your financial aid office and get the federal aid you need.
Received more student aid by accident
If you accidentally 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, to regain your eligibility, you need to repay the excess amount. You can pay it back all at once, or, if doing so would be a hardship, you can set up a repayment plan.
Once the amount is repaid, you will be able to get federal aid.
Regaining financial aid eligibility
If you lost your eligibility for student loans, contact your school’s financial aid office to create a plan to regain access to federal aid. In many cases, you become eligible again after taking some simple remedial steps.
For more information on understanding your loan options, check out this article on federal versus private loans.
Need a student loan?Here are our top student loan lenders of 2019!
|* 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.
(1)All rates shown include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
(2)This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
(3)As certified by your school and less any other financial aid you might receive. Minimum $1,000.
Information advertised valid as of 7/1/2019. Variable interest rates may increase after consummation.
4 Important Disclosures for Sofi.
* APR Rates shown are effective as of 7/1/2019 and include the 0.25% autopay discount and assume a single disbursement. If approved for a loan, the rates and terms offered will depend on things like creditworthiness, the length of the loan, and other factors, and will fall within the range of rates available by applicable loan term—check out our APR examples and terms. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Want to learn more? Check out our eligibility criteria. SoFi reserves the right to change interest rates at any time without notice, changes would only apply to applications begun after the effective date of the change.
Undergraduate Student Loans
Graduate Student Loans
Parent Student Loans
Autopay Discount. The SoFi 0.25% autopay interest rate reduction requires you to agree to make your scheduled monthly payments by an automatic monthly deduction (ACH) 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. The discount will not reduce the monthly payment; instead, the interest savings are applied to the principal loan balance, which may help pay the loan down faster. Enrolling in autopay is not required to receive a loan from SoFi.
Credit Pulls. To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms you are pre-qualified for, subject to the verification of the information you have submitted as part of your application. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan and may impact your credit score.
Unemployment Protection. If you lose your job through no fault of your own, you may apply for Unemployment Protection. If you qualify, SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in up to three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance, you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with SoFi Career Services to look for new employment. If the loan is cosigned, the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions. Learn more about SoFi’s Unemployment Protection here.
Negative Amortization. Interest begins accruing on the first disbursement date, but some repayment options do not require full principal or interest payments until the end of the deferment period. Any unpaid interest that has accrued and remains unpaid at the end of the deferment period will be added to the principal balance at the end of the deferment period. Thereafter, interest will accrue on this new principal balance. This is known as negative amortization. You can help avoid negative amortization by making extra payments on your loan during the deferment period. Check out our APR examples and terms. Still have questions? Our FAQs have answers.
Important Information About Federal Repayment Options. SoFi Private Student Loans do not have the same repayment options that federal loan programs offer, such as Income-Based Repayment or Income-Contingent Repayment, or PAYE or REPAYE. In addition, federal student loans offer deferment and forbearance options that are not available for SoFi Lending Corp. Private Student Loan borrowers. Find out more about federal repayment options here.
5 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restrictions. Loans are offered through CommonBond Lending, LLC (NMLS #1175900).
6 Important Disclosures for Citizens.
7 Important Disclosures for PNC.
Fixed Annual Percentage Rates (APRs): APRs range from 4.52% to 9.58% for a 5-year term. APRs range from 5.05% to 10.26% for a 10-year term. APRs range from 5.55% to 10.84% for a 15-year term. Fixed rates are based on the creditworthiness of the borrower and co-signer, if any. Loan Payment Example: The monthly payment per $10,000 borrowed at a fixed rate range of 5.05% APR to 10.26% APR for 10 years means you would make 120 payments which may range from $131.94 to $207.24. For the fixed rate loan, the monthly payment will remain fixed for the term of the loan. Payments may vary for other repayment term options.
Variable Annual Percentage Rates (APRs): APRs range from 4.90% to 9.92% for a 5-year term. APRs range from 5.38% to 10.57% for a 10-year term. APRs range from 5.85% to 11.11% for a 15-year term. Variable rates are based on the London Interbank Offered Rate (LIBOR) index plus a margin depending on the creditworthiness of the borrower and co-signer, if any. The LIBOR index, adjusted quarterly, is equal to the average of the one-month LIBOR rates as published in the “Money Rates” section of the Wall Street Journal on the first business day of each of the three (3) calendar months immediately preceding each quarterly adjustment date. The LIBOR index is currently 2.47%. If the index increases or decreases, your rate will increase or decrease accordingly. Loan Payment Example: The monthly payment per $10,000 borrowed at a variable rate range of 5.38% APR to 10.57% APR for 10 years means you would make 120 payments which may range from $135.93 to $212.65. For the variable rate loan, the monthly payment may increase or decrease if the interest rate increases or decreases. Payments may vary for other repayment term options.
APRs and loan payment examples are for the fully deferred repayment option for the Undergraduate & Graduate loan programs and include the 0.50% interest rate discount for automatic payments. The lowest APR is available to well qualified applicants. Your actual APR will be based on your credit qualifications, selection of fixed or variable rate option, loan program, repayment term, repayment option and whether you elect the automatic payment feature. Loan payment examples assume 30 days to first payment after the deferment period (45 months in school and 6 month grace period). Payments vary for other rates, repayment terms and repayment options.
In addition to Undergraduate and Graduate loans, PNC offers loans for Health & Medical Professions, Health Professions Residency and Bar Study. Rates may vary by loan program and are subject to change at any time. Visit pnconcampus.com for current rates, additional loan payment examples and more details about the Solution loan products.
Please note: PNC reserves the right to modify or discontinue the terms of these program at any time without notice. You are encouraged to explore all scholarship, grant and federal borrowing options before applying for a private loan. Private loans are subject to credit approval.
PNC is a registered service mark of The PNC Financial Services Group, Inc.
8 Important Disclosures for Discover.
Discover's lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.
|3.35% – 11.44%1||Undergraduate and Graduate|
|3.37% – 10.75%*,2||Undergraduate and Graduate|
|3.96% – 11.98%3||Undergraduate, Graduate, and Parents|
|2.93% – 11.57%4||Undergraduate and Graduate|
|3.52% – 9.50%5||Undergraduate and Graduate|
|3.36% – 11.62%6||Undergraduate and Graduate|
|4.90% – 11.11%7||Undergraduate and Graduate|
|3.37% – 11.87%8||Undergraduate and Graduate|