Can You Go to College & Still Receive Finiacial Aid Even Though You Owe Prior Student Loans?

You might qualify for additional financial aid, even if you already have student loan balances.

You might qualify for additional financial aid, even if you already have student loan balances.

If you never finished that first degree or are going back to school for a second degree, financial aid options likely are available. The U.S. Department of Education has a few minimal requirements you must meet to receive continued financial aid. If you qualify, you can receive funds even if you have existing loan balances. If you aren’t eligible for federal funds, you might qualify for financial aid offered by your school or a private source.


You can receive federal financial aid, such as Pell Grants and Stafford loans, if you are not in default on your prior student loan balances, have not reached the maximum credit hours for the degree you’re seeking and have not been convicted of a drug-related felony when you received your previous student loans. If you qualify for new financial aid, your old student loans are automatically placed in deferment. You won’t have to make payments on any of your student loans until six months after you stop going to school again.

Federal Education Loans

If you haven’t earned your first undergraduate degree, you may receive federal student loans for up to 180 credit hours. If you’re working on a second undergraduate degree, you can receive federal loans only for an additional 90 credit hours. Different credit hour rules apply for graduate degrees, but you could receive funding for up to 150 percent of the graduate degree program hours.

Grants and Scholarships

Many grants and scholarships are available for students returning to school. If you haven’t earned your first undergraduate degree, you might qualify for the federal Pell Grant. Your college might also have its own private grant and scholarship sources. Unlike student loans, you won’t have to pay back grants and scholarships, as long as you use the funds for the educational purposes outlined by the award.

Private Education Loans

If you’re ineligible for additional federal loans, apply for an educational loan through a private lender. Private lenders analyze your credit score and income sources to make a funding decision. If you don’t qualify on your own, most private lenders will consider a cosigner on your application. These loans generally have lower interest rates than other consumer loans and don’t require you to start making payments until you’ve been out of school for six months.


About the Author

With a background in taxation and financial consulting, Alia Nikolakopulos has over a decade of experience resolving tax and finance issues. She is an IRS Enrolled Agent and has been a writer for these topics since 2010. Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver.

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