What To Do If Your Financial Aid Appeal Is Denied

Financial aid can provide students with access to educational options they may not have otherwise had. But sometimes, students are denied additional financial aid, even after making an appeal.

If you appealed for additional financial aid, but your appeal was denied, you still have a few options. In this article, we'll let you know what steps you can take to try and secure more financial aid. We'll also provide you with some alternative places to look for money. 

Did You File a Real Financial Aid Appeal?

Your first step should be to confirm that you filed a proper appeal, based on documented special circumstances that affect your ability to pay for college. 

If your appeal was just a request for more money without any justification, don't be surprised that your appeal was denied. Bluff and bluster will not get you a better deal. Boilerplate appeals don’t work. Your child may a wonderful person with great grades, but that won’t get you more need-based financial aid.

You need to understand how to file a proper appeal. The special circumstances that are most likely to lead to a successful appeal involve job loss and pay cuts, not home-baked chocolate chip cookies. 

Meet with the Financial Aid Administrator

Next, ask the college financial aid administrator for the reasons why your appeal was denied.
What can you do differently next time? What are the next steps? Ask about other options for paying for college.

You can submit another appeal, but only if you have information about a new special circumstance that may justify an adjustment. The new appeal letter should highlight what has changed since the previous appeal letter. 

Let the financial aid administrator know if there are special circumstances that weren’t mentioned as part of your original financial aid appeal. 

Defer Enrollment for a Year

You can defer enrollment for a year. This is a good option if it will lead to a more generous financial aid package. A new year means a new application for financial aid. The base year will change, which may cause the financial aid offer to change, especially if your income changed.

However, if the student uses the gap year to earn money to pay for college, the increase in income may lead to less financial aid. 

Enroll in a Less Expensive College

Instead of deferring enrollment, consider enrolling at a more affordable college. If you applied to a mix of colleges, you may have been accepted by a less expensive college, such as an in-state public college or a community college. 

If you applied only to expensive out-of-state colleges, you may be out of luck, although there are several hundred colleges that accept late applications for admission. There are also colleges with rolling admission.

Don’t count on returning to the original college after a year or two in a less expensive college. If you take classes in a community college during the gap year, you will be considered to be a transfer student after the deferment ends, and many colleges provide less financial aid to transfer students.

If you are already in college, but the financial aid package for a subsequent year is inadequate, consider transferring to a less expensive college. About half of colleges practice front-loading of grants, where the grants are more generous during the first year, yielding a lower net price than in later years.

If you didn’t apply for financial aid as a first-year student because the college had a need-sensitive admissions policy and you figured that you could wing it for a year, you may be ineligible for institutional grants from the college in subsequent years.

Colleges don’t like it when families try to game the system. They may waive this policy, but only if you can demonstrate a big change in your family’s financial circumstances. 

Look for More Money Elsewhere

There are several places you can look for additional money that can help you pay for school.

• Scholarships: Search for scholarships using free scholarship matching services, such as Fastweb.com and the College Board’s Big Future. Also see if academic departments offer their own scholarships. You might be able to get free tuition by serving as a resident assistant in the dorm or serving as president in the student government. There are also ROTC scholarships and other military student aid. 
• Ask about tuition instalment plans: Instalment plans can break up college bills into equal monthly payments over the course of an academic term or year. This is a good option if you can afford to pay for college, just not in one big lump sum.
• Cut your spending: Live like a student while you’re in school, so you don’t need to live like a student after you graduate. Develop a minimum budget to reduce college costs. Buy used textbooks or sell your textbooks back to the bookstore at the end of the term. Use the textbooks on reserve in the library, or ask the professor if they have a copy you can use. Get a roommate or live at home with your parents to save on housing costs. Get rid of your car to save on fuel, maintenance and parking costs. Some colleges provide free bus passes. Don’t eat out or participate in paid entertainment unless someone else is paying.
• Borrow federal student loans: You may have no choice but to borrow to pay for college. The annual loan limit for dependent students varies by year in school, from $5,500 to $7,500. Independent students can borrow $9,500 to $12,500. If this is not enough, you may need to consider private or parent loans. The Parent PLUS loan has an annual limit equal to the cost of attendance minus other aid. But, if you need to borrow private or parent loans, there’s a risk that you may borrow more than you can afford to repay. Total student loan debt at graduation should be less than your annual income.
• Get a part-time job: But, student income will reduce financial aid in subsequent years. Also, students who work a full-time job are half as likely to graduate with a Bachelor’s degree within six years, as compared with students who work 12 hours or less per week.
• Check out emergency aid programs: If your need for more financial aid is due to an unforeseen emergency, ask the college if it has an emergency aid program. The college may also have a food pantry or a program where students can donate leftover meal plan points to other students. 

You can also sign up for financial counseling with a non-profit credit counselor. Sometimes, financial challenges can be caused by money management issues. A financial counselor will teach you how to manage your money instead of having your money manage you. They can help you create a budget which will free up cash to help pay for college.

Tips on How to Avoid this Problem

Too often students apply only to selective colleges and are surprised when the net price is more expensive than they can afford. The net price subtracts grants from the cost of attendance. It is the amount you’ll have to pay from savings, income and loans.

When crafting your college list, use each college’s net price calculator to get a personalized estimate of the college’s net price.

Apply to a mix of colleges, including a financial aid safety school, which is a college you can afford to attend even if you get no financial aid. Often, an in-state public college will be your least expensive option.

Apply to colleges that rely on the FAFSA for institutional aid, not just colleges that use the CSS Profile. 

How to Handle Denial of Other Types of Financial Aid Appeals

Satisfactory Academic Progress

A student can lose eligibility for need-based financial aid by failing to maintain Satisfactory Academic Progress (SAP). Students must maintain at least a 2.0 GPA on a 4.0 scale and be taking and passing enough classes to be on track to graduate within 150% of the maximum time-frame (e.g., 6 years for a 4-year degree). You can lose financial aid eligibility due to poor academic performance.

You can appeal the loss of financial aid when the failure to maintain SAP is due to extenuating circumstances, such as death of a relative, severe injury or illness of the student, domestic violence, unusual financial circumstances (e.g., student or parent job loss, death of a parent) or other special circumstances as determined by the college.

Independent third-party documentation of the special circumstances may be required, or the appeal will be denied. If your appeal was denied, you can appeal again if you have addressed the issues that caused you to fail to maintain SAP. 

Federal PLUS Loan Denial

A borrower may be denied a Federal PLUS loan if they have a poor credit history. An adverse credit history involves a current delinquency of 90 or more days on $2,085 or more debt, debts totaling $2,085 or more in collections or charged off, or certain derogatory events in the last five years (e.g., bankruptcy discharge, foreclosure, repossession, tax lien, default determination, wage garnishment).

If the only reason for the PLUS loan denial is due to a current delinquency, you can regain eligibility by bringing the delinquent account current. As soon as this shows up on a credit report, you will be eligible for the PLUS loan.

If one parent is denied a PLUS loan because of an adverse credit history, have the other parent apply if they don’t have an adverse credit history.

You can also appeal based on extenuating circumstances, such as not being responsible for repaying the debt (e.g., due to divorce), the debt was paid in full, the debt was discharged in bankruptcy (Chapter 13 only), the debt was rehabilitated or you have made satisfactory arrangements to repay the debt, or the credit report contains errors that lead to the adverse credit history finding.

You can qualify for a PLUS loan if you get an endorser, which is like a cosigner, who does not have an adverse credit history. The endorser cannot be the student.

Finally, if a parent is denied a Parent PLUS loan, the student becomes eligible for the higher loan limits available to independent students.