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How Does Transferring Colleges Affect Student Loans?
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How Does Transferring Colleges Affect Student Loans?

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Transferring from one college to another isn’t always the most seamless experience. Making sure your new school accepts your credits, adjusting your course load and possibly moving to a new campus can be difficult.

How you pay for school is an extra layer of stress, which is why you’ll need to add managing your student loans to the transfer checklist. Here’s what you need to know.

Is it Possible to Transfer Financial Aid to Another School?

After you complete the Free Application for Federal Student Aid, or FAFSA, the schools you apply to will each separately determine your financial aid award. The amount of money you get in scholarships, grants and certain types of federal student loans at each school depends on its cost of attendance and any merit aid it decides to give you.

That means your financial aid will not transfer from school to school. That doesn’t mean you won’t get any financial aid at your new school. But you’ll need to take a few steps to make sure the new campus considers you for financial aid.

If you received outside grants and scholarships from individual companies and organizations, you might need to contact them individually to move your award to your next school. This may not be necessary if your award was a one-time win, but if you’re moving mid-year or your award is ongoing, contact the scholarship provider for guidance.

How to Get Financial Aid at Your New College

To make sure your new school gets the necessary paperwork for your financial aid, take the time to cover all your bases, including:

  1. Double-check your school’s federal financial aid participation status. Make sure your new school participates in federal student aid programs, since not every college does. If they don’t, you won’t be able to get federal grants or student loans to attend. To be sure, ask the school if it participates in “Title IV” federal student aid programs (named for a section of the Higher Education Act of 1965).
  2. Complete the FAFSA. Even if you’ve already submitted your FAFSA for the upcoming school year, you can make changes to your form by adding your new school.
  3. Keep your new school in the loop. Touch base with your new school about your transfer plans and see where your aid package stands. Follow up to see if there’s anything additional documentation or information they need to streamline the process.
  4. Review your award. When you get your new award letter, review it to see what your new school is offering for financial aid. If you haven’t received enough aid to afford to attend, you can appeal the award.
  5. Don’t leave your old school behind (yet). Before you officially transfer schools, keep in touch with your old school just as much as your new one. Make sure you’re not on the hook for any outstanding charges. Keep in mind that when you leave, you’ll need to participate in exit counseling for your loans. This is an informational session that goes over how to handle your student loans after you graduate or drop below half-time enrollment.

What if You Need More Money to Cover Financial Aid Gaps?

If you find out that your new financial aid package—including student loans, federal and state grants and institutional scholarships—doesn’t cover all your new college costs, you still have additional financing options, like:

  • Private scholarships. There are thousands of scholarships available to current college students, and some are specifically for transfer students. Be mindful that the application, approval and funding process is different for every award. It could take months from the start of the application to funding if you’re awarded a scholarship.
  • Private student loans. You can apply for private student loans any time during the year (while the FAFSA has a set application window).But if you don’t have great credit on your own, you might need to enlist the help of a co-signer. This should be a last resort, since many private student loans will cover the full cost of attendance after all other aid has been exhausted. Private loans generally have higher rates and less generous repayment terms than federal loans.
  • Emergency school loans. If you’re experiencing unexpected financial circumstances, ask your new school if they offer emergency student loans. These are usually small-dollar amounts for college-related costs in difficult times. The amounts and interest rates vary depending on what your new college offers, but some might not charge any interest if it’s repaid within a certain time frame (usually a couple of weeks). Not repaying the loan could hold up your graduation.

You Must Repay Student Loans from Previous Colleges

Even though you’re moving schools, you’re still responsible for the student loans you took out to attend your previous college. And in some cases, you might have to start repayment before graduation. Federal student loan repayment kicks in when you graduate or drop below half-time enrollment. When you transfer schools, you’re essentially withdrawing from the school that received those student loans.

To avoid starting student loan repayment while you’re still in school, you can request an in-school deferment on your federal direct subsidized or unsubsidized loans. Keep in mind that deferment might pause payments, but interest will still accrue during this time on unsubsidized loans. The accrued interest will get added to your current balance, increasing your monthly payments and total amount owed over the life of your loans.

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