FAFSA Eligibility: What Disqualifies You From Student Loans?

Updated on 10/22/2025

The Free Application for Federal Student Aid (FAFSA) is the first step for most college students to access federal financial aid. This form determines your eligibility for federal student loans, grants, and work-study programs, which can cover college costs at two- and four-year schools. Filing the FAFSA form each year ensures schools can calculate your student aid index (SAI) and determine the amount of aid you may qualify for.

Most students meet the eligibility requirements, but certain factors can disqualify you from federal financial aid. Circumstances such as not having a high school diploma or GED, failing to maintain satisfactory academic progress, or defaulting on a prior loan program may impact financial aid eligibility. Below, we'll go over the key criteria and what might prevent you from qualifying.

Basic Eligibility Requirements for Financial Aid

Financial aid can significantly reduce college costs, but students must meet specific eligibility requirements to qualify. The FAFSA form is used to determine financial aid eligibility for federal student loans, grants, and work-study programs. Below is an overview of the core eligibility criteria:

• U.S. citizenship or eligible noncitizen status: You must be a U.S. citizen, permanent resident with a green card, or fall into another eligible noncitizen category (e.g., refugee or asylum status). Students with an arrival/departure record may also qualify.
• Valid Social Security Number: A valid Social Security Number is required for most students, unless you are from certain U.S. territories.
• High school diploma or equivalent: A high school diploma, GED, or proof of homeschooling completion is needed to meet enrollment standards. Some career pathway programs may also qualify.
• Financial need: Many types of federal financial aid are need-based, meaning they are determined by your Student Aid Index (SAI) compared with college costs.
• Enrollment in an eligible program: You must be enrolled in a degree or certificate program at an accredited institution of higher education that participates in federal aid programs.
• Satisfactory academic progress (SAP): Colleges require that you maintain a minimum GPA, successfully complete coursework, and move toward degree completion on time.
• Tax and income reporting: You and, if applicable, your parent or co-signer must provide federal tax information and bank account details used to calculate aid.
• Selective Service registration: Male dependent students between the ages of 18 and 25 must be registered.
• Loan status: You must not be in default on previous federal loans or owe a refund on a federal grant, and you must agree to use the money for educational purposes.

These eligibility criteria ensure that financial aid is awarded fairly and that students use federal loans and grants to pursue higher education responsibly.

What Can Disqualify You From FAFSA and Student Loans?

Most students qualify for FAFSA, but certain circumstances can lead to denial. Issues like citizenship status, not having a high school diploma, failing satisfactory academic progress, or defaulting on federal loans may affect your financial aid eligibility.

1. Not Meeting Citizenship or Eligible Noncitizen Requirements

One of the most fundamental eligibility requirements for federal financial aid is U.S. citizenship or eligible noncitizen status. To qualify for federal loans, grants, or work-study, you must be a U.S. citizen with a valid Social Security Number or fall into an eligible noncitizen category.

Examples include permanent residents with a green card, refugees, or individuals granted asylum. Students with an arrival/departure record issued by U.S. Citizenship and Immigration Services may also qualify.

If you do not meet these criteria, you cannot receive aid through the FAFSA form. However, you may still be eligible for institutional scholarships, private student loan options that require a co-signer, or state-based financial aid programs offered to noncitizens.

2. Lack of a High School Diploma or Equivalent

To be eligible for federal financial aid, you must have a high school diploma, GED, or proof of homeschooling that meets state standards. This requirement ensures that college students entering higher education have met basic academic benchmarks before receiving federal student loans or grants.

Without this qualification, your FAFSA form may be denied. Some career pathway programs allow enrollment without a diploma, but they are exceptions rather than the rule. If you're still finishing secondary education, completing a GED or equivalent is the most direct way to restore financial aid eligibility.

3. Not Enrolled in an Eligible Program

Federal financial aid is only available to students enrolled in an eligible degree or certificate program. You must be accepted at an accredited institution of higher education that participates in federal loan and grant programs. Non-degree coursework, audited classes, or enrollment at a non-eligible school will not qualify.

Dropping below half-time enrollment can also impact your financial aid eligibility. While Pell Grants may allow part-time college students to prorate the amount, federal student loans generally require at least half-time enrollment. Withdrawing completely from your program can reduce the amount of aid awarded and affect future eligibility.

4. Failure To Maintain Satisfactory Academic Progress

Satisfactory academic progress (SAP) is required to continue receiving federal financial aid. Colleges use SAP standards to ensure students are advancing toward their degree within a reasonable timeframe. These standards usually include maintaining a minimum GPA, completing a set percentage of attempted credit hours, and progressing toward degree completion without excessive delays.

If you fail to meet SAP, your financial aid eligibility may be suspended. Some schools offer academic probation or an appeal process, providing college students with an opportunity to improve their performance and regain financial aid. Keeping close contact with your academic advisor can help you stay on track with eligibility criteria and avoid losing federal loans, grants, or work-study funding.

5. Defaulting on Previous Federal Student Loans

If you have defaulted on federal student loans, you may be disqualified from receiving additional financial aid. Default happens when you miss loan payments for an extended period, and it can result in serious consequences like wage garnishment, tax refund withholding, and higher student loan debt due to penalties.

To restore financial aid eligibility, you'll need to resolve the default. Options include loan rehabilitation, setting up a repayment plan, or consolidating your federal loans into a new loan program. Some students also choose to refinance their loans through private lenders to secure lower loan rates, though refinancing shifts debt outside of federal programs.

6. Owing a Refund on a Federal Grant

If you previously received a federal grant--such as a Pell Grant--but withdrew from classes or failed to complete your coursework, you may owe money back to the government. This situation occurs when the amount of aid awarded exceeds the amount of eligible expenses covered, leaving a balance that must be repaid.

Until the refund is paid in full, your financial aid eligibility will remain suspended. This means you cannot access new aid through the FAFSA form, including federal student loans or work-study programs. Repaying the debt or setting up a repayment plan is the only way to regain access to federal financial aid.

7. Exceeding Federal Aid Limits

Federal financial aid has lifetime limits, and exceeding them can make you ineligible for more assistance. Pell Grants are capped at the equivalent of 12 full-time semesters, or about six academic years. Once you reach this limit, you cannot receive additional need-based Pell Grant funding, regardless of your financial need.

Federal loans also have aggregate borrowing caps that vary by loan program and dependent student status. If you've already borrowed the maximum allowed, you cannot take out additional federal loans through the FAFSA form. At that point, students may need to explore alternatives like private student loans, refinancing options, or personal finance strategies to manage college costs.

8. Not Maintaining Half-Time Enrollment (for Loans)

Federal student loans require that you remain enrolled at least half-time. If you drop below this threshold, you are not eligible, though Pell Grants may still be prorated for part-time enrollment. This ensures that loan funds are directed toward students actively progressing in their studies.

Losing half-time status may also trigger repayment on existing loans, meaning loan payments could begin sooner than expected. College students planning to reduce their course load should speak with an academic advisor before making changes, as falling below half-time can affect both financial aid eligibility and long-term loan repayment obligations.

9. Incarceration Restrictions

Students who are incarcerated in state or federal prisons generally cannot receive federal student loans and have very limited access to Pell Grants. While the FAFSA form can still be submitted, eligibility for federal aid is restricted in these cases.

Those incarcerated in local or county correctional facilities may still qualify for some need-based aid, depending on their enrollment in an eligible higher education program. Once released, students can typically regain access to federal financial aid, provided they meet all other eligibility requirements and complete the FAFSA form accurately.

10. Inaccurate or Incomplete FAFSA Information

Submitting false or incomplete details on your FAFSA form can result in disqualification from federal financial aid. Common mistakes include misreporting income, omitting bank account information, or entering an incorrect family size. In more serious cases, intentionally providing inaccurate information to increase the amount of aid awarded may be considered fraud.

If errors are found, your application may be flagged for verification, which can delay the release of aid and affect how much student aid index (SAI) is calculated. Always review your FAFSA carefully, use accurate financial information, and update the form if your circumstances change.

Who Should Not Apply for Financial Aid?

Almost all college students should complete the FAFSA form, even if they assume they won't qualify. The only exceptions are those who do not meet basic eligibility requirements--such as U.S. citizenship or eligible noncitizen status--or those who have already reached federal aid limits. Even students with poor credit scores, low income, or high student loan debt should still apply, since federal loans do not require a co-signer and aid is often need-based.

Can You Be Denied Financial Aid?

Yes, students can be denied if they fail to meet eligibility criteria such as citizenship requirements, enrollment in an eligible program, or maintaining satisfactory academic progress. Denials are often temporary and may be resolved by addressing the issue--such as improving GPA, repaying defaulted loans, or correcting errors on the FAFSA form.

Can Financial Aid Be Taken Away?

Financial aid can be revoked if you don't meet all eligibility requirements throughout the duration of your enrollment. Common reasons include dropping below half-time enrollment for federal loans, withdrawing from classes, or failing to maintain satisfactory academic progress. Because aid is tied to ongoing performance, changes mid-year may affect financial aid eligibility moving forward.

Can You Regain FAFSA Eligibility?

In many cases, students who defaulted on federal student loans may restore eligibility by completing loan rehabilitation, setting up repayment plans, or consolidating debt into a new loan program. If eligibility was lost due to unsatisfactory academic progress, improving your GPA and completing more credit hours may help.

Other disqualifications, like inaccurate FAFSA information, can be corrected by resubmitting accurate details. While some eligibility issues require official processes, most are temporary and can be resolved with the right steps, allowing students to regain access to grants, federal loans, and work-study opportunities.

What Happens If I Don't Qualify for FAFSA?

Not qualifying for FAFSA doesn't mean you're out of options. College students can still explore several alternative funding opportunities to help manage college costs and reduce reliance on federal loans.

State Aid

Many states offer need-based grants and scholarships that rely on separate applications. Even if you don't meet federal financial aid eligibility requirements, you may still qualify for state-level support.

Institutional Scholarships

Colleges and universities often provide their own scholarships and tuition discounts. These may be based on GPA, academic performance, or specific degree or certificate programs.

Private Scholarships

Independent organizations, nonprofits, and foundations frequently award scholarships to students based on academic merit, financial need, or career pathway. These can be a valuable supplement to cover tuition and personal finance needs.

Employer Tuition Assistance

Some employers offer tuition reimbursement or direct payments for higher education expenses. This option can reduce student loan debt while supporting career advancement.

Payment Plans

Colleges often allow students to break tuition into manageable monthly payments. While not a substitute for federal financial aid, payment plans make higher education more accessible without requiring additional loan programs.

FAFSA Myths That No Longer Apply

Some misconceptions about FAFSA eligibility can discourage students from applying, even when they qualify. Policy updates in recent years have expanded access to federal financial aid, making it important to separate fact from outdated information. Common myths include:

• You permanently lose aid after a drug conviction.
• Students are denied for not registering with the Selective Service.
• A poor credit score automatically disqualifies you.
• Only dependent students from low-income families can qualify.

In reality, the FAFSA form is designed to maximize access to higher education. Most college students are eligible for some type of aid, whether through grants, federal loans, or work-study programs.

FAQs About FAFSA Eligibility

College students often have detailed questions about financial aid eligibility. Below are answers to some of the most common concerns about the FAFSA form and what may affect your aid.

What Does ''Currently Ineligible'' Mean for Financial Aid?

'Currently ineligible' usually means your financial aid eligibility is temporarily blocked. This can happen if you're in loan repayment default, fail to maintain satisfactory academic progress, or have missing FAFSA form documentation. Once the issue is resolved, you may regain access to federal student loans and grants.

Can International Students Apply for FAFSA?

International students are not eligible for the FAFSA form because federal student aid is limited to U.S. citizens and eligible noncitizens such as permanent residents. However, some colleges, nonprofits, and private scholarship providers offer aid for international learners.

What If I Defaulted on My Student Loans?

Students who have defaulted on federal loans must take steps to regain eligibility. Options include loan rehabilitation, consolidating debt into a new loan program, or setting up repayment plans. Resolving defaults is necessary before receiving additional federal financial aid.

Does Having a Criminal Record Affect FAFSA Eligibility?

Most criminal convictions do not affect FAFSA eligibility. However, students who are incarcerated in federal or state prisons have limited access to Pell Grants and cannot receive federal student loans. Once released, financial aid eligibility can usually be restored.

What GPA Do I Need to Keep FAFSA?

Students must maintain satisfactory academic progress, which generally means a GPA of 2.0 or higher and completion of at least 67% of attempted credit hours. Falling below these requirements may result in financial aid suspension until performance improves.

Can I Lose FAFSA Eligibility Mid-Semester?

Yes, eligibility can be revoked mid-semester if you no longer meet requirements, such as half-time enrollment, SAP standards, or repayment obligations. In most cases, aid already disbursed for that term is not taken back, but future disbursements may be halted.

Find Colleges That Accept FAFSA

Don't let FAFSA eligibility requirements discourage you—most college students qualify for some type of financial aid. Even if you lose eligibility, many situations can be resolved. Explore accredited colleges that accept FAFSA on Learn.org to find programs that fit your goals.