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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!
|* 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 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
2 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 4/1/2020. Variable interest rates may increase after consummation.
3 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.
4 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restrictions. Loans are offered through CommonBond Lending, LLC (NMLS #1175900).
5 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.
5 Important Disclosures for Citizens.
Undergraduate Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As March 1, 2020, the one-month LIBOR rate is 1.62%. Variable interest rates range from 2.72% – 10.98% (2.72% – 10.83% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 4.72% – 12.19% (4.72% – 12.04% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co-signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens One is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan.
Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensone.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
Citizens One Student Loan Eligibility: Borrowers must be enrolled at least half-time in a degree-granting program at an eligible institution. Borrowers must be a U.S. citizen or permanent resident or an international borrower/eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For borrowers who have not attained the age of majority in their state of residence, a co-signer is required. Citizens One reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Citizens One Student Loans private student loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens One Student Loans-participating school.
Please Note: International Students are not eligible for the multi-year approval feature.
Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
|2.75% – 10.65%*,1||Undergraduate and Graduate|
|2.69% – 10.97%2||Undergraduate, Graduate, and Parents|
|2.80% – 11.37%3||Undergraduate and Graduate|
|3.52% – 9.50%4||Undergraduate and Graduate|
|5.20% – 14.18%5||Undergraduate and Graduate|
|2.72% – 10.98%6||Undergraduate and Graduate|