What to Do When You Run Out of Financial Aid

Federal financial aid has limits, so it’s not uncommon for it to run out. Students in need of immediate funding have a number of alternatives including scholarships, payment plans, employment, and private student loans.

The post What to Do When You Run Out of Financial Aid appeared first on LendEDU.

Running out of financial aid is the last thing you want to worry about or plan for when you’re getting a college education. Still, it happens to many students during the course of their college careers.

Simply put, there isn’t enough money earmarked for financial aid to go around. Only certain people qualify for Pell Grants and there are federal student loan limits , which means it’s all too possible to run out of money.

If you’re reading this because you ran out of financial aid mid-semester, there are a few steps you can take to get back on track and make sure you have enough money to cover your remaining college costs.

Steps to take if you run out of financial aid:

1. Contact your financial aid office
2. Apply for additional scholarships and grants
3. Consider getting a job
4. Ask family or friends for help
5. Apply for student loans mid-semester

Step 1: Contact your financial aid office

Your first step should be to contact your school’s financial aid office as soon as you realize you won’t have enough funds to cover the rest of the semester. It’s okay if you’ve already maxed out your student loans or run out of financial aid; they can help you figure out the best option.

They may suggest you look into:

• A payment plan: This option allows you to return what you’ve borrowed through out-of-pocket monthly payments. A payment plan prevents you from paying a lump sum upfront and gives you some time to earn income or obtain other sources of funding.
• Additional grants or scholarships: Look into applying to any grants or scholarships offered locally by your school, county or state. Some schools have need-based grants or unclaimed scholarship money, while conducting online database searches could turn up scholarships specific to your field of study. Apply to as many as possible.
• Student loan options: If you haven’t hit federal student loan limits, you should be able to get one mid-semester as long as you filled out the Free Application for Federal Student Aid (FAFSA) before the semester started. If you’ve already hit those limits, your financial aid office may recommend that you consider alternative options like private student loans or a Direct PLUS Loan. We discuss these options further in Step 5. 

Step 2: Apply for additional scholarships and grants

Unlike student loans, scholarships and grants do not need to be paid back. They’re free money designed to help college students pay for tuition or other education-related expenses. Here are some steps you can take to explore your options:

• Talk to your financial aid office to see if there are any available or unclaimed scholarships you may qualify to receive. 
• If there aren’t any, look into state, nonprofit, and private organizations for a variety of scholarship offerings. Use online databases and don’t forget to search for any niche scholarships or grants for which you may qualify (e.g. child of a veteran, minority, merit-based, etc.).

Keep in mind that many scholarships have application deadlines, lengthy review processes, and likely won’t be helpful in a pinch because it may take too long to receive money if you win one. Regardless, you should still apply for as many scholarships as possible in case one comes through during a future school year.

Step 3: Consider getting a job

Juggling a full course load and a part-time job isn’t ideal, but getting a job or enrolling in a work-study program could help you offset some of your expenses.

See if you can find any job openings on campus or search local businesses nearby to see if any are hiring. Consider other revenue streams like freelancing online, tutoring, or picking up a side gig.

>> Read More: How to make money in college

Step 4: Ask family or friends for help

No one likes asking for money, but if you’ve maxed out your student loans, run out of financial aid, and can’t afford your tuition, then you may need to consider this option.

Borrowing money from family or friends allows some flexibility because you can define repayment terms and avoid the high interest rates often associated with personal loans and credit cards.

If you decide to go this route, here are some tips to help you ask friends or family for money:

• Create a budget: Use a tool like Excel to list your living expenses, school costs, and any income. Providing a budget as a reference point will show that you are fiscally responsible in spite of running out of funding, and hopefully instill confidence that you will properly manage any loaned money. 
• Define terms: Are you asking for a personal loan that will be paid back—with or without interest—over time? Or are you asking for a monetary gift? Come up with a few options to present to your family or friends and see which one is the most agreeable for you both.
• Name an amount: Use your budget to determine how much money you will need to get you through the rest of the semester. Ask for that amount specifically or split it up and ask for lower amounts from multiple people.
• Be prepared and responsible: Borrowing money can change your relationship dynamics and cause added stress with family and friends. It’s good to anticipate this change, but it also could be beneficial to follow up and show them how you’ve used the money responsibly. 

Step 5: Apply for student loans mid-semester

If all else fails, your final option would be to apply for a student loan to cover your remaining costs. Even though you’re in a bind, it’s important that you take the time to learn about how the loan will work and what it will cost you in the long run.

Consider federal student loans first

If you haven’t already maxed out federal student loans, you can likely still get one as long as you filled out the FAFSA before the semester started.

You may also consider a federal Direct PLUS Loan. If you are an undergraduate, you can ask a parent to apply for a Parent PLUS Loan. If you’re a graduate student, you’re eligible to apply directly for a Grad PLUS Loan.

You’ve maxed out federal student loans, now what?

As a last resort, you could look into private student loans. Private loans aren’t ideal because they typically have higher interest rates and carry fewer benefits than federal loans. However, you can most likely take one out in the middle of the semester if you’re eligible.

You will most likely need a cosigner with a good credit score to qualify, but you might be able to find some student loans without a cosigner.

You can learn more about how private student loans work and compare the best student loans with our guide.

The post What to Do When You Run Out of Financial Aid appeared first on LendEDU.