They are within the letter of the law. Any application for federal aid has stipulations regarding “academic progress,” and if you had a GPA below 2.0 or failed any classes, you fall into that category. Most likely, if this is the first time or was only for one semester, you will write/file an “appeal” explaining why you failed and why you think you will do better this time around. I did this when it was too late to “withdraw” from classes and I had to quit my courses one semester to take care of an ailing parent. They generally give everyone a second chance if it’s for a legitimate reason.

No, this is not discrimination. Federal regulations are very specific of when, to who, and under what circumstances financial aid funds can be awarded. This information is checked regularly to make sure, from several sources. To my knowledge, the school is not required to receive “your permission” to maintain compliance. Although they do ask for previous college credit on your admission application. It doesn’t say you can omit them “if you think the classes have no bearing”. If you lied/omitted the info there, you might want to stop complaining to the higher ups. By doing so, you are complaining you got caught being dishonest and most schools have policies in place regarding student behavior and honesty. You could find yourself out on the street for not being honest on your admission application. Your correspondence to “state/federal levels” are going unanswered because complaining about a school catching you in a lie is a complaint of no merit. Of course you aren’t going to get a response.

Yes, previous college credit sometimes does effect your eligibility. What exactly are they saying? Is your fin aid being stopped because of a prior bachelors degree? Poor GPA? Too many college credit hours? All or none of the above? Maybe if you gave more info I could help you more in maintaining your fin aid eligibility.