What to Do If You Lose Your Financial Aid

By Kevin Brouillard. December 23, 2024 · 7 minute read

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What to Do If You Lose Your Financial Aid

Student eligibility for financial aid does not carry over from year to year. If your financial situation changes — or your academic progress and course load take a dip — you could receive less financial aid or even lose eligibility entirely.

If your aid package is less than the year before, you might be wondering, can I get financial aid back after losing it? Students do have some options to get financial aid back, but it’s important to understand why you lost it in the first place.

Here’s a look at some possible reasons for losing financial aid, tips for working to restore it, and alternative options to help pay for college.

Key Points

•   Financial aid eligibility is reassessed annually and may be influenced by factors such as a change in income.

•   Maintaining satisfactory academic progress, including a minimum GPA and credit completion, is crucial to keep financial aid.

•   Students can contact their school’s financial aid office to find out why their financial aid was lost and possible steps to get it back.

•   It’s possible to appeal a financial aid suspension if poor academic performance was due to extenuating circumstances.

•   Those who lose financial aid can consider alternative funding sources like scholarships and grants, getting a job to help pay for school, and taking out student loans.

Why You Might Lose Your Financial Aid

How do you lose financial aid? There are several factors that could impact how much you get.

•  Rise in income: Financial aid eligibility is calculated for students each year based on information provided on the Free Application for Federal Student Assistance (FAFSA). An increase in your parents’ earnings — or your own earnings if you have a job — could bump up the amount you or your family are expected to contribute toward your education. That, in turn, reduces the financial aid you qualify for.

•  Falling grades: Your grades can affect your financial aid as well. While it may vary from school to school, students typically need to have a cumulative GPA of at least 2.0 and pass enough classes to complete a four-year bachelor’s degree program in six years.

;  Students who fail to maintain satisfactory academic progress are placed on financial aid suspension, meaning they are not eligible for federal financial aid.

•  Number of credits taken: The number of credits you take can also impact the amount of financial aid you receive. Students usually need to be enrolled in school at least half-time — taking six to 11 credits — to be considered eligible for federal financial aid. However, part-time students may have their financial aid prorated based on the number of course credits they are taking. In other cases, full-time enrollment (12 credits or more) may be required by schools for certain forms of financial aid.

•  Misconduct: Disciplinary action from violating a school’s code of conduct or academic misconduct such as cheating may result in losing financial aid, especially institutional scholarships and grants.

•  Student loan default: Finally, if you’re returning to school to pursue another degree, you could lose financial aid eligibility if you’ve defaulted on student loans. A federal student loan goes into default when you’ve failed to make payments on it for 270 days.

How to Get Your Financial Aid Back

When you’ve lost financial aid, there’s no guarantee that you’ll be successful in getting it back, but there are some strategies that may help.

•  Reach out to the financial aid office. If you’re not sure why your financial aid has been lost or reduced, contact your school’s financial aid office to find out what happened and what you can do.

•  Get your grades up. If you lost financial aid for not making satisfactory academic progress, improving your grades in the coming semester may help you regain your eligibility. However, this will likely require paying for school with other means for the time being.

•  Start an appeal. Appealing a financial aid suspension with your school could be an option if your academic performance was impacted by extenuating circumstances, such as illness or a death in the family. The appeals process typically requires filling out a form and writing an appeal letter to the college explaining the situation that led to financial aid suspension.

•  Deal with defaulted loans. Students who are in default on their federal student loans have a couple options to get out of default. You could apply to consolidate your defaulted federal student loan into a new Direct Consolidation Loan. Because the balance on student loans is due in full when you enter default, consolidation can pay off the balance quickly.

  Just be aware that a Direct Consolidation Loan adds accrued interest to the new loan principal and typically carries a higher interest rate than student loan refinancing.

  Loan rehabilitation is another option to consider if you’re in default. You’ll need to contact your lender to request a loan rehabilitation plan, which typically involves making nine monthly payments on time. The monthly payments are usually lower than your original payment rate, but keep in mind that rehabilitation is a one-time opportunity.

Recommended: Student Loan Refinancing Guide

How to Pay for College Without Financial Aid

Losing financial aid can make it challenging to attend college, but there are several alternatives to help get funding to pay for your education. Consider these options:

Scholarships and Grants

Scholarships and grants are gift aid that students typically don’t need to repay.

There are many scholarship opportunities available to students, and they each have their own eligibility requirements and application process. Scholarship eligibility can involve academic merit or financial need, or they may focus on your chosen major or participation in extracurricular activities.

Federal grants may no longer be an option if you’re on financial aid suspension. However, you could still be eligible for grants from your college, state government, nonprofit organizations, and private entities. Grants are often awarded based on financial need.

To help narrow your search, you can use a scholarship search tool to find grant and scholarship opportunities that align with your background and field of study.

Student Loans

If you lost financial aid due to a change in income, you could still qualify for federal student loans. Federal Direct Unsubsidized Student Loans, for instance, do not require borrowers to demonstrate financial need, and they’re available for undergraduate and graduate students. Bear in mind that these loans accrue interest while students are in school and there are limits on how much you can borrow.

If your financial aid was suspended for other reasons, you might consider taking out private student loans to pay for education expenses not covered by scholarships and grants. The amount you can borrow varies by lender, but you can often get up to your school’s total cost of attendance.

Unlike federal student loans, private student loans require a credit check, meaning you may need someone to cosign the loan. It’s important to compare different lenders, interest rates, and terms before deciding to apply for a private student loan.

Keep in mind that you have the option to refinance student loans to save money in the future. When you refinance, you replace your old loans with a new loan, ideally one with a lower interest rate and more favorable terms. Note that refinancing federal student loans makes them ineligible for federal benefits like income-driven repayment plans.

A student loan refinance calculator can help you see what you might save with refinancing.

Part- or Full-time Work

Many students work while going to college to help pay for school and living expenses. Consider how much time you can dedicate to a job while managing your course load to choose the best work situation.

If part-time employment makes the most sense for you, on-campus jobs are one option to consider to help pay for education expenses. If you can land a position in your field of study, a job at your school could help build skills and enhance your resume.

The Takeaway

If you lose financial aid, you may be able to get it back, though there is no guarantee.

Contact your school’s financial aid office to find out why you lost your aid and what you can do to get back on track. Students can try appealing a financial aid suspension with the school if there were extenuating circumstances for not maintaining satisfactory academic progress. You can also work to improve your grades in the coming semester to regain financial aid eligibility.

And remember, there are other options to pay for college without financial aid, including scholarships, grants, student loans, and working while going to school. If you do take out student loans, you might consider student loan refinancing once you graduate to help reduce your payments.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.


Photo credit: iStock/FG Trade Latin
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