Wednesday, February 18, 2015

Student Loan Series: Transferring Affects Your Student Loans

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The decision to transfer schools might cross your mind, and can become something of a conflict of interest. Transferring schools can allow you to trade-up, so to speak. If you attended a school with a mediocre reputation, poor job market location, or expensive tuition, you might consider a transfer to a school that will boost your objectives.  However, keep in mind that transferring may also affect your financial aid.  And, some of the changes may be affected based on when you decide to transfer.  Here’s how.
Regardless of your transfer date you’ll need to resubmit your FASFA form.  Your financial status and eligibility to receive financial aid shouldn’t be affected by a change in schools.  This also means that your expected family contribution (if in undergrad) will also remain the same.  Further, make sure you check the amount of credits that transfer to remain eligible for financial aid under the satisfactory academic policy.  Federal subsidized loans can also be affected greatly if you are transferring from a four-year to two-year program.  Any campus-based aid provided by the previous school will not be transferred.  Further, you may receive less institutional aid than you may have received at your previous school because each school is different, may have differing amounts of available money to give out, and most campus aid is distributed on a first-come, first-served basis.  On the plus side, if your new school is cheaper you may receive a smaller financial aid award than your previous school, but this only means that the cost of attendance is cheaper and the amount of loans you have to repay will be less!
Transferring Mid-semester:  Your financial aid is “earned” after 60% of the semester has been fulfilled.  If you leave before this is met, the school will return unearned aid to the federal government.  This can affect how much you’re able to borrow at your new school.
Transferring Mid-year:  FASFA forms are for the academic year; so a mid-year refiling means that most of the financial information will be the same and your eligibility for financial aid should be the same as well.  However, depending on how much you earned at the previous school, you may qualify for less financial aid as you did as a first-time or returning student.
Transferring For a New Academic Year:  If you don’t know where you’ll be attending school for the next academic year, then your FASFA form will not reflect the school by the deadline (you can always add potential schools on your filing), but this could mean you are awarded less aid than had you filed on time.
Keep in mind your previous school’s existing loans.  Those loans will begin their grace period (or repayment based on the terms) as soon as you drop to below full-time/half-time enrollment (based on the terms).  Therefore, it is important that you contact the lenders to work out a continuing education deferment or other repayment option.

Until Next Time,
Jenny L. Maxey

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