How to Get Financial Aid (FAFSA) Back If You Lose It

November 10, 2019

 

You’re trying to go back to school to get your bachelor’s degree.  But the financial aid office is saying you lost your eligibility for federal financial aid programs and you should apply for private student loans.

Now you’re asking:

If you lose federal financial aid you can get it back. You just need to determine why you lost it and then follow the steps to regain eligibility.

In this post, I’ll go over the 4 most common reasons people lose their financial aid eligibility.

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  1. Get loans out of default
  2. Raise your GPA
  3. Enter a drug rehab program
  4. Repay your excess financial aid

#1 Get Out of Default

Can you get student loans if you’re in default?

Yes.

To get financial aid to go back to school you have to get your federal loans out of default. There are 4 ways to get out of default:

  1. Consolidation
  2. Rehabilitation
  3. Repay in full
  4. Settlement

Many loan borrowers simply don’t have the money for the last two options, so they end up choosing between consolidation and rehabilitation.

Related:

Consolidation gets you out of default about 5 times faster than rehabilitation. So if you need to regain federal financial aid eligibility fast, a consolidation loan may be the right choice for you.

You can’t consolidate your loans if you have an active garnishment. In that case, you’ll need to make 9 monthly payments under the rehabilitation program before you get out of default.

If you consolidate your loans, your principal loan balance may increase dramatically due to student loan interest capitalization.

#2 Raise Your Grades

Aside from not defaulting on a student loan, the Department of Education sets basic eligibility requirements to receive federal student aid (FAFSA).

Chief among them is continuing to make satisfactory academic progress. One way to do that is to keep your grade-point average above the minimum set by your school.

If your GPA dips below that number, you’ll be placed on financial aid suspension. you’ll need to work with your school’s financial aid and registrar’s office to regain eligibility for FAFSA.

Often times you can explain your extenuating circumstances and ask that your Title IV eligibility be reestablished immediately or that you be put on an academic plan that would lead to you regaining eligibility.

Visit studentloans.gov to find out more about Satisfactory Academic Progress.

#3 Complete a Drug Rehab Program

If you can’t get student loans because of a drug conviction, you have two ways to get it back:

  1. Complete an approved drug rehabilitation program; or
  2. Pass two unannounced drug tests administered by an approved drug rehabilitation program.

Once you complete either requirement, contact your school’s financial aid office. They’ll work to reinstate your eligibility for financial aid.

#4 Payback Your Financial Aid

The other day I got a text message from a borrower:

“If I owe money to financial aid, can I go back to school?”

Yes. You can go back to school if you owe money to financial aid by making payments towards the debt you owe. (Don’t worry if it’s student loan debt; so long as the loans haven’t defaulted, you can go back to school.)

Sometimes you can return to school before you make all the required monthly payments. But most times you have to pay the debt in full before they’ll let you return.

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