Avoid Losing Your Student Loan Eligibility
In addition to final exams, college students have something else to worry about this time of year: their financial aid for spring semester. While financial aid is generally calculated and scheduled in the fall for the full year, a student's actions -- or inaction -- can cause that aid to be canceled for the spring.
The following tips will help you know how your grades and credit completion pace can affect your aid eligibility, and how to handle financial aid suspension.
In addition to the other criteria for federal financial aid eligibility, a student is required to be making what's called "satisfactory academic progress," or SAP, to maintain that eligibility. There's both a qualitative and quantitative component to SAP, and a student must be meeting both in order to continue receiving federal loans, grants and other financial aid.
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The qualitative measure is your grades. If you are enrolled in a program two academic years or more in length, you are required to maintain at least a C grade-point average or have an academic standing that meets with your program's graduation requirements.
Some schools have policies that require a minimum C average at all times, while others allow for a progression type of grade - point average that would allow a student to have a GPA lower than a C earlier in the program.
The quantitative component of SAP is the pace at which you're completing the program. Federal student aid regulations require that a student must be on track to complete their program within 150 percent of the published time frame for that program. So a student enrolled in a two-year degree must be able to complete that degree in no more than three years to continue to receive federal aid. Schools check on this status at least annually, and some every semester just prior to aid disbursement.
You can fail this component well before the 150 percent time frame is reached if the credits you've earned are lower than the number of credits attempted. For example, if you failed or withdrew from half of your classes in the first two years of a four-year program, you will only have completed 25 percent of the credits needed to graduate.
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Maintaining that pace of completion would mean you would only complete 75 percent of your required credits within the six years, or 150 percent, of the time frame for that four-year program. Depending on their written SAP policy, many schools would consider such a student to have failed that SAP component in the first two years. Other schools consent for a progression, which allows for a decreased credit completion in the earlier years of a program, but requires an increased level of progress as time goes on.
In recent years, federal regulation has changed to allow schools to offer a sort of probationary period for students who have failed one or both components and therefore lost their eligibility for aid.
If your school checks academic progress every semester, they are allowed to use a financial aid warning status. This status is given to students who have failed one or both components and allows them one more semester where they may receive aid without any type of appeal being required.
If you have been put on financial aid warning, it's important to find out what you need to achieve in terms of grades or credits in the next semester to ensure you don't lose your access to aid. It's a good idea to meet with an academic counselor and the financial aid office before the semester begins to develop a plan that will allow you to meet these minimum requirements.
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If you fail to meet one or both requirements, you will lose eligibility for at least federal financial aid, if not state and school based aid as well. Some schools allow students in this situation to file an appeal in an attempt to regain aid eligibility. The appeal must explain why the student hasn't met the requirements and what has changed to allow them to meet these requirements in the future.
Many schools will approve an appeal where the student has experienced illness, injury, death of a loved one or other special circumstances. If it's possible for the student to regain SAP in the next payment period or semester, the school will likely approve the appeal and put the student on financial aid probation without any further requirements from the student.
If the school feels it will take more than one payment period or semester to regain SAP, they will generally require the student to submit an academic plan that will allow the student to meet SAP requirements by a specific time, or allow for successful graduation from the program. You must achieve the milestones within this academic plan to continue to receive aid.
While it can be tempting to coast through finals in the next few weeks or not put your all into that last paper or project, doing so could result in a nasty surprise as you gear up to return to school in January. If you find out you've lost your aid, knowing your school's SAP policy, which will appear online or in the school's student handbook, ahead of time will help you navigate your options and develop a good plan to recover.
Betsy Mayotte, director of regulatory compliance for American Student Assistance, regularly advises consumers on planning and paying for college. Mayotte, who received a B.S. in business communications from Bentley College, is a frequent contributor to ASA's SALT Blog; responds to public inquiries via the advice resource "Just Ask;" and is frequently quoted in traditional and social media on the topics of student loans and financial aid.
