Will having a charged off bank account kill my chances of getting student aid through FAFSA?

Question

I have a bank account that was charged off in 2005 in the amount of $150.

1. Will that be the factor for not getting financial aid if everything else is on track for needing help?

2. If I pay it off before I send in my FAFSA application will it change the result?

Answer 1

See, that's the great thing about the federal government's financial aid program - your credit history doesn't matter.

In fact, the ONLY creditor that you can not owe money to if you want to qualify for government aid....

Is the government itself.

So long as you don't have a previous government loan that's in default, you WILL qualify for federal aid.

What form that aid will take depends on  your financial need. That's the whole point of the FAFSA - the opportunity to tell the Department of Education about your financial circumstances. You may get grants if your family's financial circumstances aren't that great, but even if your circumstances are exceptional, you will still qualify to borrow money from the government's Stafford loan program.

Where your handling of past credit issues WILL affect you is in any private borrowing that you might need to do. It's hard enough for a student to qualify for a private educational loan without black marks on their credit record - a charge off will just make your challenge that much more difficult. It's not that big of a deal, really, because almost all private loan applicants are told that they'll need a cosigner to qualify. I'm guessing that you will, too.

So - no, as far as the government's financial aid (Pell grants, work-study, Stafford, Perkins, etc.), your bank account charge-off will have no impact on your eligibility or qualification.

I hope that helped. Good luck!

Answer 2

This has nothing to do with applying for fin aid.  Do your fafsa now and do it quickly.