How drug convictions can impact student loans

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Drug convictions impact families in many different ways. They hurt your chances of getting a job, finding reliable housing and being able to pay for college. Whether you had a drug conviction before applying for financial aid or you got one while in school, it can affect what you’re able to receive in college grants, loans and work-study opportunities.

How long you’re ineligible for aid

Your college financial aid relies on your current situation. For instance, if you’re serving time for a drug conviction right now, you’re not eligible to receive a Federal Pell Grant or federal student loans, and opportunities for a Federal Supplemental Educational Opportunity Grant (FSEOG) and work-study are limited. However, once you’re released, most limitations are removed.

Eligibility takes into account only convictions that have come up while a student receives financial aid. When you complete your Free Application for Federal Student Aid (FAFSA), you’ll be asked if you’ve ever been convicted for a drug-related offense while you were receiving federal financial aid. If you have, you’ll need to complete a worksheet that the federal government uses to evaluate your financial aid eligibility.

How long you’re ineligible for aid depends on the type of conviction and the number of previous offenses. If you’re convicted of possessing illegal drugs, the periods of ineligibility are:

  • First offense: One year.
  • Second offense: Two years.
  • Third offense: Indefinitely.

If you’re convicted of selling illegal drugs, the periods of ineligibility are:

  • First offense: Two years.
  • Second offense and beyond: Indefinitely.

If you’re convicted of a drug offense after completing the FAFSA, you might lose eligibility. Depending on your conviction, you may have to return any money that was awarded to you.

Regaining eligibility

Your eligibility for federal aid — like grants and student loans — will get suspended for at least one year after you’re convicted of a drug offense while receiving financial aid, depending on the offense and the type of conviction. That said, you may be able to regain eligibility early by completing an approved drug rehabilitation program or by passing two unannounced drug tests administered by an approved drug rehabilitation program.

Also note that if your conviction is reversed, set aside or removed from your record, it will not count against your eligibility for federal aid. Eligibility also won’t be impacted by convictions received while you were a juvenile, unless you were tried as an adult.

Other ways to fund college

Federal aid is one of the best ways to fund college. It should be the first place you go to receive scholarships, grants, work-study and federal student loans. But if you can’t get aid at the federal level, there are other ways to pay for school:

  • State and local funding. Even if you’re not eligible for federal aid, you should still fill out the FAFSA, since you could still be eligible for state aid. You can also explore other types of aid through local and state nonprofits, for-profit businesses and organizations that don’t require the FAFSA.
  • Institutional funding. Many colleges offer scholarships, grants and, in some cases, loans to help cover the cost of your education. See what your school offers and what you’re eligible for. You may find that college-level funding is enough to cover most of your education costs.
  • Scholarships and grants: Scholarships and grants are money that doesn’t need to be repaid, and you can find free money that isn’t tied to schools or government entities. Scholarships tend to be based on merit, while grants are based on need. You might qualify for both, so it’s important to find as many as you can before looking for student loans.
  • Private student loans. Instead of loans coming from the federal government, private student loans come from individual lenders. You’ll need a solid credit score and good credit history to qualify, or a co-signer who meets the requirements.

The bottom line

If you’ve been convicted of a drug-related offense, your future financial aid eligibility will be affected only if you are convicted after you complete your FAFSA or while you’re a student receiving financial aid. However, you still have options. You can regain eligibility in most instances, but there are also other types of aid, like state and local funding, institutional funding or private student loans.

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Written by
Dori Zinn
Contributing writer
Dori Zinn has been a personal finance journalist for more than a decade. Aside from her work for Bankrate, her bylines have appeared on CNET, Yahoo Finance, MSN Money, Wirecutter, Quartz, Inc. and more. She loves helping people learn about money, specializing in topics like investing, real estate, borrowing money and financial literacy.
Edited by
Student loans editor