How to regain footing in college after loss of financial aid
When you first started college, you might have assumed that your financial aid package would be solid for the next four years. But now spring has rolled around and you鈥檝e been blindsided: You鈥檝e learned you鈥檒l be getting less money next year.
There are five major reasons why you could lose financial aid:
- Your parents are making more money. If they鈥檝e been pushed into another tax bracket, it鈥檚 especially likely to affect your financial aid.
- Your grades didn鈥檛 requalify you for scholarships or grants.
- You didn鈥檛 take enough credits to requalify for federal aid.
- Your school鈥檚 tuition and fees increased.
- Your school鈥檚 financial aid offers more scholarships during freshman year and more loans during later years.
Don鈥檛 panic: You might be able to negotiate your financial aid offer, and if you can鈥檛, there are steps you can take to fill the gaps.
Talk to your financial aid office
Your first step should be starting a dialog with your financial aid office. The staff there can help you find out what happened and how to respond. If your grades slipped, ask what you can do to get back on track.
鈥淚 like when they call in and say, 鈥業 understand that my grades didn鈥檛 meet the requirements. Is there anything I can do?鈥� That shows some initiative,鈥� says Brad Yeckley, assistant manager of financial literacy at the Penn State Financial Literacy Center.
Apply for private scholarships
It鈥檚 a good idea to apply for聽聽throughout your college years, even if you aren鈥檛 worried about losing financial aid. Maximize your chances by playing up your accomplishments 鈥� such as a high GPA, awards, leadership roles and volunteer activities 鈥� showing that you align with the organization鈥檚 mission in your application, and focusing on lower-competition scholarships, such as local scholarships or scholarships for non-freshmen.
Take advantage of tutoring programs and office hours
It鈥檚 not uncommon for students to lose scholarships because their have grades slipped. And your financial aid award letter might not have even mentioned the minimum GPA required to keep those funds, says Marguerite Dennis, who spent 40 years working in college admissions and financial aid and is the author of 鈥淭he New College Guide: How to Get In, Get Out, and Get a Job.鈥�
If that鈥檚 your situation, prove that you鈥檙e actively trying to raise your grades to regain your aid by signing up for tutoring programs and visiting your professors鈥� office hours.
Appeal your award
Appealing your award works best if you鈥檝e had a recent change in your financial circumstances 鈥� such as a birth or death in the family, or a parental job loss 鈥斅爐hat wasn鈥檛 reflected on your most recent FAFSA.
If you鈥檝e lost eligibility for federal aid because you鈥檙e not making聽, tell your school鈥檚 financial aid office about any extenuating circumstances that affected your grades.
Max out your federal aid
If you must take out loans to make up the difference, start with federal loans. They鈥檒l most likely offer the lowest interest rates, they come with flexible repayment plans and, in some circumstances, they can be forgiven. Plus, they don鈥檛 depend on your credit.
These are the current federal loan options for undergrads:
- Direct subsidized and unsubsidized loans: 4.29% APR; you can borrow between $5,500 and $12,500 per year.
- Perkins loans: 5% APR; you can borrow up to $5,500 per year.
- Parent PLUS loans: 6.84% APR; you can borrow up to the cost of attendance, minus any other aid.
Consider taking out a private loan
Private loans should be a last resort, but they can be a useful tool for some 鈥� particularly borrowers with good credit or who have a co-signer with a great credit score. Look for a聽that offers incentives, such as cash back for good grades, and make interest-only payments while in school, if possible. That way, your accrued interest won鈥檛 be added to your principal balance after聽you graduate.
But be cautious: Private loans don鈥檛 come with the same borrower protections as federal loans.
Transfer to a cheaper school
If you can鈥檛 afford to take out more loans, consider continuing your education elsewhere. You might be able to take general education courses at your local community college, says Deborah Fox, CEO and founder of Fox College Funding. Weigh your budget and potential postgrad earnings against your potential loan payments to see if transferring is a good option.
If you decide to change schools, make sure that enough of your credits will transfer to make the switch worth it. Taking more than four years to graduate is another added expense.
Devon Delfino is a staff writer at聽NerdWallet, a personal finance website.聽贰尘补颈濒:听ddelfino@nerdwallet.com. Twitter:聽.
This article first appeared at .
