What are 5 reasons that Disqualify you from getting a Federal Student Loan for Graduate Programs?

Every year, the U.S Department of Education gives over $120 billion in federal grants, loans, and work-study funds to more than 13 million college students, making it the largest provider of graduate student financial aid in the country.

October 1st is the first day that the Free Application for Federal Student Assistance, better known as the FAFSA, will be filled out by graduate students to obtain their share of these funds for the academic year 2011-2022.

What graduate students need to know is that a substantial majority of financial assistance is distributed on a rolling basis in the United States, so the earlier you apply, the greater the chances of generous aid being restored.

What are the types of Loans available for Graduate Programs after applying to FAFSA?

Direct Unsubsidized Loans

Direct Unsubsidized Loans (sometimes referred to as Unsubsidized Stafford Loans) are federal student loans lent by the Direct Loans program that have low, guaranteed interest rates and adjustable repayment options for undergraduate and graduate and professional students. There is no prerequisite to apply for proven financial necessity. Students are liable until the debit balance is paid off, for paying all the interest that adds up.

Parent Plus Loans

Parent PLUS loans are provided by the Federal Student Aid office to parents investing on behalf of their children. Parents may borrow up to the full cost of attendance of  their child’s school, minus any financial assistance that their child has already received.

As of July 1, 2019, parent PLUS loans come with a 7.08 percent interest rate and, as of Oct. 1, 2019, a 4.236 percent origination charge. The borrower must have a child enrolled at least half the time in a Title IV school in order to be eligible.

Plus, they can’t have an unfavorable credit background with parent creditors. If they do, by adding a creditworthy sponsor to their loan application, it is always possible to apply.

Grad Plus Loans

Graduate PLUS loan, or Grade Plus loan, is a type of federal student loan or Direct PLUS loan issued by the U.S. Department of Education. The Grad Plus loan is intended to help graduate students fund their tuition. A student will usually seek a Graduate PLUS Loan after maxing out a Direct Unsubsidized Loan as part of the federal Direct PLUS Loan scheme (a type of a federal student loan). The Direct Unsubsidized Loan limit is $20,500 a year, so the Graduate PLUS Loan could be an alternative for you if you have met the limit and will need funds to meet the expense of graduate school.

5 Reasons You Could Lose Financial Aid Eligibility for Graduate Programs

1. Your student loans are in default

You would need to get out of debt before the government requires you to take out new loans if you have defaulted on your federal loans and are now trying to go back to school.

Your federal loans are deemed to default if they are due for 270 days or longer. You must either pay back the debt in full or apply for recovery or consolidation in order to get out of default.

Federal laws mandate you to make nine straight on-time contributions over 10 consecutive months in order to rehabilitate your debt. Alternatively, you should apply for a loan from Direct Consolidation and commit to a repayment schedule driven by profits.

2. Satisfactory Academic Progress

Each school sets its own Adequate Academic Progress minimum. If you fail to reach the SAP, your loan money via FAFSA can be refused.

If you write a letter of appeal and the school’s financial aid office accepts it, you will still get your money. But if you appear to refuse to comply with SAP, subsequent requests will be less likely to be accepted.

3. Drug-Related Crimes

Being convicted of certain offenses will cause you to be refused federal student loans for certain crimes. Specifically, being convicted of possession or selling of illegal drugs when receiving federal assistance can disqualify you from receiving future aid.

If so, then the Student Assistance Qualifying Worksheet will also be completed. You could be eligible for full or partial financial assistance after that. By attending certain rehab treatments or subjecting yourself to periodic drug tests, you can still restore eligibility.

4. You accidentally received too much student aid

You may become ineligible for potential loans if you have received more financial assistance or grants than you were expected to obtain. Even if it was a mistake on the part of the lender, you bear the responsibility to fix it.

In most situations, to restore your financial aid status, you need to refund the excess sum. You can pay it all back all at once, or you can set up an installment schedule if doing so will be a burden. You will be eligible to get federal help after you’ve repaid the amount.

5. Your citizenship status has changed

If your residency status has expired or has been revoked, you will lose eligibility for financial assistance. The only way to get that back will be to regain your former qualified status or becoming a U.S. resident.

How do I get a Federal Student Loan for Graduate Programs?

You must first complete and file a Free Application for Federal Student Aid (FAFSA®) form to qualify for a federal student loan. Your college or career school will give you a financial aid deal, which could include federal student loans, depending on the outcome of your FAFSA form. You will be told by your school how to take more or half of the loan.

Before you receive your loan funds, you will be required to

  • complete entrance counseling, a tool to ensure you understand your obligation to repay the loan; and
  • sign a Master Promissory Note, agreeing to the terms of the loan.

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