How Transferring Colleges Can Affect Student Loans

Students transfer from one college or university to another for many reasons. For example, you may find that a school just isn’t a good fit, or another college offers a program more aligned with your career goals. During the current coronavirus pandemic, some students are transferring to be closer to home or to save money on tuition costs.

Transferring schools can affect your student loans and overall financial aid package, whether you are planning to transfer at the end of the fall semester or at the end of the school year.

If you’re planning to transfer, you may already know which of the credits earned at your current college will follow you to your new school. Unlike credits, however, student loans never transfer between schools. That’s because the cost of attending your current school was a factor in determining your financial aid award, including your eligibility for student loans.

[Read: Transferring Colleges: 10 Frequently Asked Questions.]

Before you transfer colleges, here are some things you should understand and consider when it comes to financing your education at a new school:

— You may need to update your FAFSA.

— Your financial aid award may change.

— You’re still obligated to repay student loans you already received.

You May Need to Update Your FAFSA

If you plan to continue using federal student aid or loans to finance your education, your new school needs access to your federal student aid report, which provides the financial information the school needs to make determinations about your financial aid award. As with your current school, your financial aid award at the new school will be based on a few factors, including your expected family contribution and the cost of attending the new school.

Listing your new college on your Free Application for Federal Student Aid, or FAFSA, is the first step in this process.

Whether or not you need to update a current FAFSA depends on when you plan to transfer. If you’re transferring in the middle of a school year and plan to use federal financial aid or student loans, you’ll need to update your FAFSA to include your new school’s information. If you’re planning to transfer at the end of a school year, you can simply include your new school when you fill out a FAFSA for the upcoming year.

To submit an update, log in to using your FSA ID, add your new school’s information and submit the update.

Your Financial Aid Award May Change

You can typically expect your federal aid award at your new school to be about the same as what you received at your current school, but there are a couple of notable exceptions.

First, if you receive institutional or state aid at your current school, you may see a change in those amounts at your new school, so be sure to closely check the eligibility rules and availability of these types of aid.

For example, some state grants require you to attend an in-state school, and you could lose access to these funds if you choose a new school in a different state. And some colleges have more aid to distribute than others.

Importantly, if you transfer in the middle of the academic year, you may not receive either of these types of aid at all for the remainder of the year. That’s because most states and universities have a limited amount of aid available, and most of this aid is distributed on a first-come, first-served basis. Halfway through the year, it’s likely that this aid has already been given to students who enrolled at the beginning of the fall semester.

In addition, some loans like Parent PLUS loans or private student loans allow you to borrow up to the cost of attendance at your school. If you have this type of loan and the cost of attending your new college is significantly higher or lower than your current school, the amount that you are eligible to borrow can change.

This likely won’t have an impact on your ability to finance your education, though, since the amount that you can borrow is aligned to your costs. But it’s helpful to be aware of how and why the amount you can borrow may change.

You’re Still Obligated to Repay Student Loans You Already Received

When you transfer to a new college, the student loans that you borrowed to attend your prior school do not disappear, even if you are not able to transfer all of your credits. If you accepted loans, you are still obligated to repay them plus interest.

Keep in mind that federal student loans are set to enter repayment six months after you leave your current school or drop below half-time enrollment. As long as you enroll in a new school at least half time, your student loans will go back into in-school deferment, so pay attention to the timing of your transfer if you don’t want to make payments on your loans in the meantime.

If you have private student loans, they may already have been in repayment from the date of disbursement. However, you should contact your lender if you have a deferment period that needs to be continued after the transfer. If you transfer in the middle of the school year, you may also need to tell your private loan lender about the transfer so that it does not disburse funds to your old school.

More from U.S. News

How to Weigh Student Loan Debt During the College Search

Everything You Need to Know About the 2021-2022 FAFSA

9 Things Prospective College Transfer Students Need to Know

How Transferring Colleges Can Affect Student Loans originally appeared on

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