8 Ways You Could Lose Your Federal Financial Aid

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Many students across the U.S. depend on financial aid to attend college and earn their degrees. In 2017-18, the average full-time undergraduate student received $14,790 in financial aid, according to the College Board.

But earning financial aid when you start college doesn’t guarantee you’ll get it all four years, and some students find themselves facing financial aid suspension. While you can go through an appeal process, the best scenario is to avoid losing aid in the first place.

8 possible reasons for financial aid suspension

There are a variety of reasons you could lose your federal financial aid as a college student. By learning what they are, you can try your best to preserve your eligibility.

  1. Your grade point average is too low
  2. You dropped below half-time enrollment
  3. Your family is making more money
  4. Your parents didn’t file federal taxes
  5. You forgot to file the FAFSA every year
  6. Your aid was only available freshman year
  7. You’ve defaulted on previous student loans
  8. You were convicted of a drug-related offense

You were denied financial aid — now what?
What to do if your financial aid suspension appeal letter doesn’t work

1. Your grade point average is too low

To maintain your eligibility for financial aid, you need to make satisfactory academic progress toward your degree. This includes maintaining a minimum grade point average (GPA), which is determined by your school.

Typically, you’ll need to keep up a GPA of 2.0 or higher on a 4.0 scale, or at least a C average. Your financial aid office can tell you exactly what GPA qualifies as satisfactory at your school. If your grades dip below this standard, you could lose your financial aid.

What to do: If your grades are slipping, take action to boost your GPA before it’s too late. Make the most of free on-campus resources for tutoring and academic support. Meet with your professors and find out if you can take on extra credit work to improve your grades. Your financial aid — and your degree — depend on it.

2. You dropped below half-time enrollment

Making sufficient progress toward your degree is another part of maintaining satisfactory academic progress. You’ll need to earn a certain number of credits each semester, as well as maintaining at least half-time enrollment in your program.

If you’ve failed or withdrawn from classes, you might drop below the level required to receive financial aid.

What to do: Work with your advisor to design a reasonable course of study that fulfills the credit requirements for your major and graduation status. If you’re in danger of falling behind, be proactive about getting help from professors or tutors.

3. Your family is making more money

A lot of federal and institutional financial aid is need-based, meaning the amount you get depends on your family’s financial situation and Expected Family Contribution (EFC). If your family starts making a higher income, you might get less financial aid than you did the previous year — or even none at all.

What to do: There’s not much you can do if your family’s financial situation changes dramatically from one year to the next. But if you feel your EFC doesn’t reflect your real situation, you could consider a financial aid suspension appeal letter that explains extenuating circumstances, such as medical bills or job loss.

4. Your parents didn’t file federal taxes

If you’re a dependent student, you likely need your parents’ tax information from the previous year to file the FAFSA and get financial aid. But if your parents didn’t file federal taxes and were required to do so, you won’t be able to complete the FAFSA and, as a result, won’t have access to aid.

What to do: To avoid this scenario, your parents need to ensure their taxes are in order before it comes time to file the FAFSA (Oct. 1 or later).

5. You forgot to file the FAFSA every year

In order to receive financial aid on an annual basis, you need to file the FAFSA every year. If you failed to complete the FAFSA, your financial aid won’t be renewed. Fortunately, the FAFSA stays open until June 30, and it’s better to file late than never.

But your state deadline might have already passed, and your college might not have as much money to distribute, since it’s already given out aid to other students. Note that some colleges additionally require a form called the CSS Profile, so it’s important to file that as well if it’s required.

What to do: Prepare to file the FAFSA even before it becomes available by collecting last year’s tax forms and financial information. File as soon as possible when it opens on Oct. 1, since some financial aid is doled out on a first-come, first-served basis.

6. Your aid was only available freshman year

Financial aid is typically determined on an annual basis, and you’re not guaranteed to get the same amount in subsequent years as you did the first year. In fact, some colleges appear to “front-load” financial aid offers to attract incoming students, then offer less in later years. Likewise, some scholarships you received as a freshman might not be renewable for all four years.

What to do: Speak with your financial aid office to clarify the terms and conditions of your financial aid package. Reach out to any scholarship organizations as well to find out if your aid is renewable and if there are any steps you need to take to preserve your eligibility.

7. You’ve defaulted on previous student loans

When you file for financial aid, you need to state that you’re not in default on any previous student loans. Although this situation probably won’t apply to undergraduates, it could come into play for graduate students or adults returning to school. So make sure to keep up with any required payments on older student loans — falling behind could mean you’ll lose eligibility for future financial aid.

What to do: Make sure to keep up with any required payments on older student loans so you don’t lose eligibility for future financial aid. If you’ve already defaulted, try to get your loans back into good standing through loan consolidation or rehabilitation.

8. You were convicted of a drug-related offense

If you’re convicted of a drug-related offense while receiving federal student aid, your eligibility could be suspended. You might also have to return any aid you’ve already received.

What to do: If you’ve been convicted of a drug-related offense, you might be able to get your financial aid back by completing an approved drug rehabilitation program and passing two drug tests. Once you’re eligible again, contact your financial aid office ASAP to regain your grants, loans and, if applicable, work-study.

You were denied financial aid — now what?

Losing financial aid is a nightmare scenario, especially if you can’t afford to stay in school without it. If you’ve been denied financial aid, your first step is to find out why. Reach out to your financial aid office and ask what made you ineligible.

Once you understand the reason, you can take specific steps to resolve the problem. You can also write a financial aid suspension appeal letter to your financial aid office, explaining any special circumstances that impacted your eligibility and providing any supporting documentation.

If your grades or enrollment slipped due to a medical issue, a death in the family or another emergency, for instance, you might be granted some extra time to bring your grades back up. Or if your family’s financial situation changed due to job loss, the office might be able to grant you some extra aid.

Although there’s no guarantee your financial aid suspension letter will work, it’s worth a shot. Stay in communication with your financial aid office so they can help you navigate this difficult time and hopefully get back the aid you need to pay for school.

What to do if your financial aid suspension appeal letter doesn’t work

If your financial aid suspension appeal is denied, you might have to make some tough decisions about what to do next. A few possibilities include:

  • Transfer to a cheaper school: If you can’t afford tuition and fees at your current school, you might consider transferring to a less expensive school, such as a community college, to earn credits. Make sure your existing credits transfer, though, or you could end up being in school for longer than four years and paying more money as a result.
  • Borrow an emergency loan: Some schools offer emergency loans to students who encounter financial hardship. Speak with your financial aid office about whether this is possible, even if you haven’t regained eligibility for federal aid yet.
  • Apply for private scholarships: It’s a good idea to apply for private scholarships all four years of college, especially since some freshman year scholarships aren’t renewable. Stay on top of scholarship applications to earn money for tuition and living expenses.
  • Make money with a part-time job: If you have time to work during school and the summers, you could earn money that could help you pay for school.
  • Consider private student loans: Although federal student loans tend to be your best bet for funding, a private student loan could help you fill the gap. But be careful not to borrow too much, so you don’t get stuck with high payments after graduation. Note that you might need to apply for a private student loan with a cosigner to meet income and credit requirements.

Hopefully, your loss of financial aid is just a bump in the road, and you’ll regain eligibility soon. But in the meantime, consider these alternatives strategies for lowering the cost of tuition and covering college expenses. And remember to stay in contact with your financial aid office, as its administrators can help you navigate the often-confusing world of financial aid and ensure you have the funding you need to earn your degree.

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

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