Taking out student loans for college is likely one of the biggest financial decisions you'll make in your life. The important thing to remember is that a loan is just that: a loan. You are legally bound to repay your school loans, regardless of whether you pass all of your classes, complete your degree or find a job after school. However, failing a class or withdrawing from classes may have an impact on your financial aid eligibility and payment schedule.
GPA and Loan Eligibility
Financial aid is awarded partly on the basis of student performance. Schools expect students to make satisfactory academic progress; most schools require that students maintain a cumulative and semester grade point average of 2.0 or higher. If students fail to meet this standard, either by failing too many classes or simply by receiving poor marks, they may become ineligible to receive federal student loans.
Withdrawing From School
Normally, students have a grace period of six months to begin repaying loans after graduating or withdrawing. However, if a student withdraws entirely from school once a semester financial aid award has been disbursed, he may be required to pay back the unused portion of his loans from that semester before his grace period expires. For example, if he leaves halfway through the semester, about half of his loan will be considered "unused."