Wednesday, January 28, 2015

Student Loan Series: Dropping Classes Affects Financial Aid

The New Year has begun and so has a new semester.  You’re getting a feel for your classes and schedule, but may be a bit overwhelmed.  Maybe you’re even considering dropping a course.  While dropping a class may help you academically or allow you to manage your schedule better, it may have a negative effect on your financial aid or scholarships.  Since scholarships vary, be sure to check the terms of your scholarship or with the person or agency that granted the scholarship to see if you will be disqualified for dropping credits or a certain curriculum.
For federal loans, you’ll need to watch that a dropped course or courses doesn’t cause you to fall below full-time or half-time enrollment depending on what is required of your loan terms (hereinafter “enrollment requirement”).  Falling below the requirement can result in aid adjustments or even ineligibility for loans the next semester or year.
The amount awarded may be adjusted if you fall below the enrollment requirements.  For example, the amount granted is typically prorated for Federal Pell Grants.  Most schools require students to be responsible for the rest of the amount owed after the loans have been adjusted.  This may cause you to get private loans, which likely have higher interest rates, fewer flexible repayment plans, and require more repaid over the life of the loan.  Additionally, dropping below enrollment requirements may kick-start your grace period.  Federal loans allot a grace period (which usually begins upon graduation) which allows you to get your finances in order and a repayment plan scheduled before your first payment is due.  If you drop below your enrollment requirement, your grace period may begin and therefore repayment may become due despite continuing to take the rest of your classes.
You may also want to consider whether the change in credits will affect your estimated graduation date.  If the class is required for graduation and isn’t offered again until the next year, this could push your graduation back, costing you more tuition money among other opportunity costs.
 For these reasons, it is important to check with your advisor as well as your financial aid office first to see how a drop will affect you.

You Might Also Like:

Until Next Time,
Jenny L. Maxey
Author of Barrister on a Budget:  Investing in Law School...without Breaking the Bank

    No comments:

    Post a Comment