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The office of Federal Student Aid provides over 9.9 million college students with more than $120 billion in grant, work-study, and student loan funds each year to help pay for college or career school. However, there are situations where students can lose their financial aid.
Students will want to consider how their grades affect financial aid to avoid having federal college aid taken away. Generally, you’ll need to make satisfactory academic progress (SAP) each term to continue receiving federal financial aid, but you may be able to regain lost aid by filing a financial aid appeal.
If you’ve received aid through private scholarships or grants, you may need to meet their minimum requirements to remain eligible for gift aid. Private lenders may also have minimum GPA requirements, but these vary by lender.
Key Points
• Federal financial aid requires students to maintain Satisfactory Academic Progress (SAP) — typically a 2.0 GPA, 67% course completion rate, and program completion within 150% of normal timeframe.
• Dropping below SAP standards can cause loss of grants, loans, or work-study eligibility, though aid can sometimes be regained through an appeal.
• Private scholarships and grants often have their own GPA or credit hour requirements, and failure to meet them may result in lost funding.
• Private student loans usually don’t depend on grades, but lenders may have credit or GPA requirements depending on the institution.
• Students who lose aid due to grades may file a SAP appeal if poor performance was linked to extenuating circumstances like illness or family hardship.
Types of Financial Aid
There are many types of financial aid available to college students from the federal government, states, schools, and private sources. This funding can be used to cover most higher education costs, such as tuition and fees, room and board, and books.
Sallie Mae’s 2025 “How America Pays for College” survey found that while parent income and savings covered nearly 50% of college costs during the 2024–25 academic year, families still heavily relied on financial aid and federal loans to cover the other half.
Grants & Scholarships
College grants and scholarships are a form of financial aid that can help make college more affordable because they don’t usually need to be repaid. The U.S. Department of Education, colleges, and universities award an estimated $256.7 billion in grant and scholarship money to students each year. The Sallie Mae survey found that scholarships and grants covered approximately 27% of school costs for families in 2024-25.
The biggest differences between college grants and scholarships are where the funds come from, eligibility requirements, and the application process. Grants are typically given based on financial need while most scholarships are merit-based. Scholarships may be awarded to students based on their academic or athletic achievements, extracurricular activities, fields of study, and more.
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Federal Work-Study
Federal Work-Study is a form of financial aid that offers students funds via part-time employment on campus. Several factors determine whether a student is eligible to participate in the Federal Work-Study program, including their family’s income and the student’s enrollment status at the school.
As with other forms of federal financial aid, a student’s grades affect their eligibility. Students are expected to make SAP, which is a school’s standard for satisfactory academic progress toward a degree or certificate.
Student Loans
Student loans can either come from the federal government or private lenders. To qualify for a federal student loan, students must demonstrate financial need, fill out the Free Application for Federal Student Aid (FAFSA®), be enrolled in an eligible degree or certificate program at least half-time, and maintain SAP.
Another option is to take out a private student loan; however, this is generally only considered after all other options have been exhausted. Private student loans may be more expensive than federal student loans and don’t offer the same borrower protections, such as access to income-driven repayment and forgiveness programs. Private lenders can set their own terms and repayment plans so you should read the loan terms closely before making any borrowing decisions.
Recommended: How to Pay for College
How Grades May Affect Financial Aid
If you find yourself struggling in school, you may be wondering how grades affect financial aid.
State and federal financial aid, such as grants, loans, and work-study, require students to maintain satisfactory academic progress while working toward a degree. Academic performance is evaluated based on each school’s individual policy.
Your school’s policy will tell you what grade point average (GPA) or equivalent you must maintain, the minimum number of credit hours you need, the required pace of course completion, maximum time frame allowed, and more.
As far as how grades affect financial aid, federal regulations state that students must maintain a 2.0 cumulative GPA, or a grade of “C”, on a 4.0 scale. Additionally, students must complete at least 67% of cumulative credits attempted, and progress through their undergraduate program no longer than 150% of the published length of the educational program.
Private scholarships and grants may have their own academic requirements. Dropping below the minimum requirements could result in termination of the scholarship or grant money for the following term but typically does not require repayment. If you receive a scholarship or grant, make sure you read the fine print to see if your grades affect your financial aid.
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Do Grades Affect Private Student Loans?
Typically, no. However, each lender has different eligibility criteria for student borrowers. Similar to other types of loans, private student loans are given based on factors including your (or you cosigner’s) finances and credit history and, depending on the lender, there may or may not be a GPA requirement. Private lenders usually care more about your ability to repay the loan than your grades, but again, each lender is different.
If you’re interested in a private student loan, check with the lender to see if there are any student loan GPA requirements before making your decision.
Recommended: I Didn’t Get Enough Financial Aid: Now What?
Regaining Lost Financial Aid Due to Low Grades
Have you lost financial aid due to low grades? You may still be able to get it back. Losing financial aid due to low grades means you aren’t satisfying your school’s SAP requirements.
Visit a Financial Aid Office
One of the first things to do after losing financial aid due to low grades is to visit your school’s financial aid office to discuss your options. Your financial aid office can help you formulate a plan to improve your grades so that your financial aid can be reinstated.
Make sure to ask about the requirements for the financial aid that you are or were receiving and find out if you’re able to file a financial aid appeal.
File a Financial Aid Appeal
You can file a financial aid appeal, or an SAP appeal, if your school allows it and if the poor performance was due to circumstances outside of your control. There must be a link between poor performance and the special circumstance. Some acceptable situations include:
• Death of a relative
• Severe personal injury or illness
• Other special circumstances determined by the school
If you can prove your lower grade directly correlates to one of these situations, then it may be possible for you to regain your financial aid. Check your college’s website for directions and for more information on filing a SAP appeal.
The Takeaway
Your grades do affect your financial aid and federal student loans. Generally, if your cumulative GPA dips below a 2.0, you will no longer be considered to be in good academic standing. However, if your low grades are due to extenuating circumstances, you can try to appeal. Other forms of financial aid, like private grants and scholarships, may also have their own set of academic requirements.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
FAQ
Can financial aid be taken away for bad grades?
It’s possible. You must remain in good academic standing to keep any type of state or federal financial aid, such as grants, loans, and work-study. Private scholarships and grants may also have their own set of requirements to keep any gift aid.
While private lenders typically don’t have any student loan GPA requirements, each lender is different.
Do you get more financial aid if you get good grades?
Most federal financial aid programs do not take your grades into consideration when determining how much financial aid to give. However, bad grades can hurt your federal financial aid availability.
Good grades are even more important to recipients of merit scholarships and some grants but there are scholarships that do not take grades or GPA into consideration.
Will my FAFSA be affected if I fail a class?
As long as you meet your school’s definition of Satisfactory Academic Progress (SAP), one failed class won’t affect your financial aid package.
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