Can I apply for FAFSA if I have a previous loan in default?
September 4, 2021 6:03 AM Subscribe
I'm applying for graduate school and trying to apply for FAFSA and it looks like I can't even get an FSA ID or apply at all while I have an undergrad loan in default. Does anyone know if this is true?
I've tried to find answers elsewhere but I'm not having luck. I thought that it would still be possible to get funding while I try to work out solutions with the defaulted loans. I'm unemployed and had a really organized, smart plan for grad school and a future career, but it's looking like maybe I can't do this at all.
To say I'm panicking is an understatement. I can't work and do this grad program at the same time. I need funding to do this future job where I have many connections, and where I will have a job waiting for me and can then pay everything back. I was filled with hope and an excellent, practical plan for moving forward. But it appears it's not going to possible. I have absolutely no Plan B in light of the pandemic, and any information would be so welcome. I'm praying I'm missing something.
I've tried to find answers elsewhere but I'm not having luck. I thought that it would still be possible to get funding while I try to work out solutions with the defaulted loans. I'm unemployed and had a really organized, smart plan for grad school and a future career, but it's looking like maybe I can't do this at all.
To say I'm panicking is an understatement. I can't work and do this grad program at the same time. I need funding to do this future job where I have many connections, and where I will have a job waiting for me and can then pay everything back. I was filled with hope and an excellent, practical plan for moving forward. But it appears it's not going to possible. I have absolutely no Plan B in light of the pandemic, and any information would be so welcome. I'm praying I'm missing something.
Best answer: Don't panic. Apply for loan consolidation. In most circumstances, you can do what they call "consolidating into IBR," which will give you a new loan with you auto-enrolled in an income-based repayment plan (which it sounds like you could use anyway). This will allow you to avoid having to make the nine payments required for loan rehabilitation, which is too time-consuming for your situation and also challenging for some. Consolidation into IBR may increase your total cost of loan repayment slightly for complicated math reasons, but unless your defaulted loans are quite large, not unsustainably so.
You can read more about consolidating into IBR here. This is entirely manageable if you keep your head.
(Note: there are scammy private companies that will promise to remedy your situation. Stay far away. Stick with the actual government and your loan servicer(s).)
posted by praemunire at 10:39 AM on September 4, 2021 [5 favorites]
You can read more about consolidating into IBR here. This is entirely manageable if you keep your head.
(Note: there are scammy private companies that will promise to remedy your situation. Stay far away. Stick with the actual government and your loan servicer(s).)
posted by praemunire at 10:39 AM on September 4, 2021 [5 favorites]
Response by poster: Thank you for the information, it's very helpful and very appreciated.
posted by asimplemouse at 4:16 PM on September 5, 2021
posted by asimplemouse at 4:16 PM on September 5, 2021
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"Can I get FAFSA if I have defaulted student loans? You can’t get FAFSA if you have defaulted student loans. You’ll first need to get your student loans out of default to regain eligibility for federal student aid."
The path forward seems to be applying for loan rehabilitation.
posted by jzb at 9:00 AM on September 4, 2021 [3 favorites]