loan default

Often students face the problem of raising additional funds to meet their student expenses since their current student loan, scholarship or grant falls short sometimes woefully. In these situations it is important to understand what you can and cannot do. You can apply for additional student loans both federal and private to help you meet the shortfall. Do remember though that the loan amount will be determined by taking all the financial aid you are currently getting and working out the difference amount you need to cover the shortfall. An example would be a student that already has a subsidized Stafford loan can look into applying for an unsubsidized Stafford loan to meet his or her additional funding requirements.

Applying for scholarships  and grants should not be an issue even if you currently owe money on an existing loan. Infact private or public scholarships or grants should be your first port of call when you start your college funding exercise.

I owe money to another school

If you owe money to another school and are planning to attend a different school then you will have problems. The school that you owe money will not release any of your school transcripts unless you pay all the money you currently owe to the school. This is done and rightly so to discourage students from attending one school for a term and then transferring to a different school and not paying their tuition and other dues at the first school.

Can I apply for federal aid if I am in default?

No you cannot, one of the eligibility conditions for applying for any type of federal aid is that the applicant must not be in any kind of loan default. If you find yourself in this situation, then look at loan consolidation and start repaying your current student loans to get out of the default status before you can explore federal funding again.

Can I apply for a private student loan if I owe money?

If you are looking to supplement your current student loan with another loan then yes you can apply for additional private loans. If you are in default then the chances of you getting another loan is pretty slim. Private banks and credit unions look into your credit score, credit history and your credit worthiness before approving you for a student loan and existing loan defaults on your accounts is not going to endear yourself to them in any manner.

We get a number of questions on this subject of additional student loans or taking out fresh financial aid. I’m listing a few below (personal details removed)

• “Can you go to college if you owe another college?”
• “Can i receive financial aid if i owe another college money?”
• “If I owe money to my college will I still be able to register in another college?”
• “I failed at one college can i get financial aid at another college?”
• “Can I take an additional student loan even if I owe money?”
• “Can I get a Pell Grant if I owe money on my student loan?”
• “Can I look at additional financial aid if I am in default?”
• “Can I apply for federal aid if I already have student loans?”