This is a common problem. Prior education should only be a disadvantage if you've attempted 150% or more of the credits your degree program requires.
You should contact your school's financial aid office to appeal this ruling. Most of the time, if you can provide a solid reason for the appeal to be granted, your financial aid office can override this the academic progress requirement and reinstate your aid. To get started, contact your financial aid office to find out more about their specific process for the appeal.