Financial aid is funds provided to students to help them pay for college tuition and other educational expenses. Financial aid may come in the form of grants, scholarships, loans, or work-study programs. These forms of assistance are typically issued through the federal government, state governments, colleges, or private organizations.

Student loan debt has become a significant issue in recent years. According to the Federal Reserve Bank of New York, total student loan debt in the United States now stands at $1.5 trillion, surpassing both credit card debt and auto loan debt. This amount is spread across 44 million borrowers, with the average borrower owing nearly $37,000.

What Happens If You Owe Student Loans and Need Financial Aid?

If you owe student loans and need financial aid, it can be difficult to navigate the system. The first thing to understand is that if your student loans are in default, it will affect your eligibility for financial aid. This is because the U.S. Department of Education considers a defaulted loan to be delinquent debt that must be paid before any new aid can be awarded.

It’s important to note that even if your student loan debt is not in default, it could still impact your eligibility for financial aid. This is because the Free Application for Federal Student Aid (FAFSA) requires applicants to report their total student loan debt on the form. If your debt is too high, it could reduce the amount of aid you’re eligible for.

The best way to manage student loan debt and financial aid is to take a proactive approach. It’s important to understand your options and make sure you take advantage of all available resources. This includes researching repayment plans and consolidating loans, if necessary. It also means considering alternative funding sources, such as grants and scholarships.

How to Get Financial Aid When You Owe Student Loans

The most important thing to understand when it comes to getting financial aid if you owe student loans is the relationship between loan defaults and financial aid eligibility. A defaulted loan will significantly reduce your chances of receiving financial aid, so it’s important to take steps to get back into good standing as soon as possible. This could include working with your loan servicer to set up an affordable repayment plan, or consolidating your loans to lower your monthly payments.

In addition to getting back into good standing, there are several other steps you can take to increase your chances of receiving financial aid when you owe student loans. Make sure to research any grants and scholarships that may be available. Many organizations offer scholarships specifically for students with student loan debt, so it’s worth taking the time to look into these opportunities. Additionally, you should consider applying for income-driven repayment plans, which can lower your monthly payments and make it easier to manage your debt.

Finally, it’s important to remember that the FAFSA considers more than just your debt when determining your eligibility for financial aid. Other factors, such as your income and family size, will also be taken into account. So even if you have a high amount of student loan debt, you may still be eligible for some types of financial aid.


Owing student loans can make it difficult to obtain financial aid. However, understanding the relationship between loan defaults and financial aid eligibility, as well as taking advantage of available resources, can make it easier to manage your student loan debt and get the help you need to pay for college. With the right approach, you can get the financial aid you need to pursue your educational goals.

Take the time to research grants and scholarships, look into income-driven repayment plans, and make sure you’re in good standing with your student loan servicer. By taking these steps, you can increase your chances of receiving financial aid even if you owe student loans.

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By Happy Sharer

Hi, I'm Happy Sharer and I love sharing interesting and useful knowledge with others. I have a passion for learning and enjoy explaining complex concepts in a simple way.

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