Federal Student Loans: What Happens to My Student Loan If I Switch Schools?

When you switch schools, your current financial aid package does not directly transfer with you. Your new school will need to calculate your eligibility from scratch, whether you are planning to transfer midyear or at the end of the school year. Furthermore, you will still have to repay any student loans that you have received from your current school. You should stay in contact with the financial aid office at your current school and your new school throughout the transfer process.

Recommend Actions

The following is a list of recommended actions to make sure that you are able to receive all the financial aid you are eligible for at your new school.

• Make sure that you new school participates in federal student aid programs
• Update your FASA form to include your new school
• Notify the financial aid office at your current school that you plan to transfer
  • Ask whether your account is fully settled (if not, your transcript may be withheld)
    
  • If transferring midyear, check if you need to submit a withdrawal and a request to have your remaining financial aid disbursements canceled
    
  • Go through exit counseling for your current federal student loan(s)
    

Does Withdraw Trigger Repayment on My Student Loans

The quick answer is ​yes​, your Direct Subsidized Loans and/or Direct Unsubsidized Loans enter repayment status when you withdraw from a school to transfer to another school. However, as long as you are enrolled at least half-time at an eligible college or career school, you are eligible for in-school deferment. Qualifying for deferment means you can avoid having to start making payments on your loans while you're enrolled at your new school.

In-School Deferment

In most cases (provided you are enrolled at least half-time), your loan will be placed into a deferment automatically based on enrollment information reported by your school, and your loan servicer will notify you that the deferment has been granted. You can also complete and turn in an In-School Deferment Request, if you prefer.

​Note:​ You ​MUST​ continue making payments on your student loan(s) until you have been notified that your request for deferment has been granted. If you stop paying and your deferment is not approved, your loan(s) will become delinquent and you may go into default.

References

• University of California Irvine: Loan Counseling (Entrance and Exit Counseling)
• Fast Web: How Do I Transfer Financial Aid from One College to Another?

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