What happens to financial aid if you withdraw from school? | 09.29.11

Posted in Financial Aid By Student Loan Network Staff

girl with questionsHere at StudentLoanNetwork.com, we get a lot of questions from students and parents. One of the more common ones involves withdrawal; If a student withdraws from school, what happens to financial aid? The short answer is, it depends.

What does it mean to withdraw?

Let’s start at the beginning, shall we? A withdrawal from school is when a student ceases to be enrolled before the closing of a period of enrollment. The actual date depends on your school and how semesters are arranged. Dropping a class or two does not count as a school withdrawal, and the following standards do not apply in that situation. Note: You always want to officially withdraw, as an unofficial withdrawal may lead to failing grades and a poor transcript.

What happens to federal aid?

In the case of a withdrawal, your school is required to return a portion of your Title IV aid to the Department of Education. This includes only the federal aid you received, private loans are treated differently. The exact amount returned depends on when you withdraw from classes. If you withdraw after you are 60% through the semester, all of your financial aid is considered “earned” and will not be returned to the government. However, a withdrawal before this date requires some calculations by your financial aid office to determine how much of the funds were considered used.

Will you get to keep any money?

Possibly. According to the Department of Education

“If the amount disbursed to the student is less than the amount the student earned, and for which the student is otherwise eligible, he or she is eligible to receive a Post-withdrawal disbursement of the earned aid that was not received.”

If you are eligible to receive a post-withdrawal disbursement (meaning you get money back from your financial aid award) the school has 45 days from the date of withdrawal to disburse Title IV grant funds to you, and 180 days for loan funds.

There are different refund policies for institutional fees, so check with your financial aid office for more information on school-specific refund policies.

What happens to private loan funds?

There are no federal regulations regarding the need to return private loan funds, so check with your lender to find out more. In most cases, unused private loans will be returned to you.

When will you need to start repayment?

In the case of a withdrawal, a student must begin repaying any unreturned loans when the grace period ends. For private loans, it’s possible a withdrawal would mean immediate repayment, so contact your lender for more information.


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50 Responses to “What happens to financial aid if you withdraw from school?”

  1. quy says on October 1, 2012 at 7:29 am:

    I enroll to college on august 22 and now i want to drop out of school do i need to repay for financial aid?

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  2. Gabs says on September 28, 2012 at 8:39 pm:

    I’m into my fifth week of school and due to financial reasons plus living in NY, I have to withdraw. I will be moving back to Miami to attend FIU, I have been accepted. In NY, I’ve been attending FIT with pell grant, work-study, subsidized and unsubsidized loans, along with grants given by the school. I already re-submitted my fafsa application for FIU. Will I be eligible for financial aid from the school or will withdrawing affect being able to receive financial aid?

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  3. robert says on September 26, 2012 at 10:23 am:

    i am attending a communitty college an i am 4 weeks in my first semester im thinking about withdrawing due to tuition fees i was eligable for tap and pell an some sub and unsub loans i have not reicieved any disbursment from school if i withdrew will i reicieve my tap or even my pell grant back in a check

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  4. Jennifer C says on September 15, 2012 at 10:59 pm:

    I withdrew from classes at a community college in 2001 (11 years ago) after receiving federal financial aid. I did not have to pay back any of those funds. 5 years ago, I tried to enroll at the same college, but was informed by the college that I was not eligible for financial aid which includes grants, loans and work-study, and that I would have to pay for a semester of college on my own before receiving financial aid again – which I was/am unable to do. I applied again this year and got the same response from the same college.

    Is this normal? Is there a statute of limitations? Can I apply at another college/university and receive aid? If not, can I apply for a private loan to pay for tuition?

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    • Jennifer C says on September 15, 2012 at 11:45 pm:

      More to add .. sorry for not doing so at first — I withdrew because my 5 year old was hospitalized and then required round the clock care for 6 weeks afterwards, and being a single parent, I had care issues in addition to working full time.

      Would an appeal even work in this situation?

      Reply To This Comment
      • Student Loan Guru says on September 17, 2012 at 12:05 pm:

        @Jennifer C – An appeal is your best bet. Given these circumstances, you have a solid case. Ask your financial aid office for more information about their appeals process.

  5. Katerius Etheridge says on September 11, 2012 at 2:50 pm:

    I have a question I have been at this on-line school today will make the third week I am here .I am thinking about withdrawing and can you explain to me how the sixty percent thing work because my school charges for four classes up front.What happen to the remainder of my pell grant and my sub and unsub loan?

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  6. kathy kenyon says on September 11, 2012 at 5:55 am:

    what happens if my daughter, through no fault of her own, is forced to transfer to another junior college due to poor health in her family and they are living 4 counties away, will she lose her loans and pell grant or can it be transferred. She will be going to a community college in our county

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    • Student Loan Guru says on September 11, 2012 at 9:22 am:

      @Kathy – As long as the new school also participates in the Federal Direct Loan Program, she will remain eligible for aid. However, the financial assistance will be returned by one school, and re-awarded by the new school – it does not simply transfer. The new school will need to calculate her eligibility at their institution, so the amount awarded may change. For more information on the financial aid transfer process, you will need to contact the financial aid office at your daughter’s new school.

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  7. Olivia says on September 10, 2012 at 4:25 am:

    But my classes were most likely canceled today n I can’t get to my school to go in and talk to someone because of an emergency. I tried calling but they had me waiting for a very long time. I was informed that my tap/fafsa would be coming in the middle of the month what do I do when it comes?

    Reply To This Comment
  8. gerry says on September 8, 2012 at 2:59 pm:

    My daughter just started grad school and did not get the classes she needs so is thinking of withdrawing and apply to more schools this fall. She has until September 25th to officially withdraw but her government financial aid was just disbursed. If she withdraws, will the school refund the government? We are anxious to understand how the funds are repaid once she is officially withdrawn from the university. Thanks you.

    Reply To This Comment
    • Student Loan Guru says on September 10, 2012 at 7:45 am:

      This depends on how much of the semester has been completed. The financial aid office needs to calculate the portion that has been used (if any) and will return the remainder to the Department of Education.

      Reply To This Comment
      • Gerry says on September 11, 2012 at 7:59 pm:

        So, what happens to the refund amount that she received to pay for her living expenses. She has to continue to pay under a lease until she finds someone to take it over. No classes taken and a full university withdrawal would be requested. She is at school outside of the US so will she be allowed to use her living expense refund to pay for her lease until she finds someone to take it over? Thanks for any advice you can give us. We are running out of time and she needs to make a decision by 9/24.

      • Student Loan Guru says on September 14, 2012 at 2:11 pm:

        Depends. You will need to contact the school’s financial aid office for their policy and how this will work for your specific situation.

  9. Sharon says on September 3, 2012 at 2:15 pm:

    I’m into my 3rd week of a school and have realized that the school (a technical school) will not support my learning disabilities even though these disabilities are covered under ADA. Though the college is obligated to do so because they receive federal funds, they refuse to allow accommodations stating that it would not be fair to other students. In light of this stance, I dont feel that I can do the work unsupported and need to withdraw. Is there any allotment for this in regard to student loan repayment? I dont really want to quit school, but honestly, unsupported I will just fail and wont be getting anything out of it anyway.

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  10. Jamie says on September 3, 2012 at 3:15 am:

    I started school 2 weeks ago. My second week of school I got a really bad kidney infection. I keot in touch with all my teachers and made arrangements for all home work. The only problem is spanish class. I only missed two classes, but missed alot of info. I am in school full time. I can get all the other work finished and completed in my other classes, but I think I might have to drop spanish just because I missed so much info. I already received my pell grant, and the school already did the census. Will I still receive my federal grant for the full amount if I drop the class. Because I want the loan money even if I drop the class. And will I get it on time. How does that all work?

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    • Student Loan Guru says on September 4, 2012 at 7:50 am:

      That depends. As long as you remain above half-time enrollment, you will still be eligible for federal aid, including grants. However, the amount may decrease based on how long you’ve attended class. The only way to know for sure is to contact your school’s financial aid office, as they will recalculate your eligibility based on the new information.

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  11. samantha says on August 24, 2012 at 4:41 pm:

    I was attending empire beauty for cosmotology an I was suppose to get my last dispursment when I reached 1201 hours but I got dropped at 1034 and I was woundering will I still receive the last dispursment and how long will it take before I get the check?

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  12. David says on August 19, 2012 at 10:15 pm:

    If I obtain outside scholarships and the funds are sent to the school I am enroled in, then for some reason I transfer to another school before school starts, what happens to the money? Does it transfer with me to my new school?

    Reply To This Comment
    • Student Loan Guru says on August 20, 2012 at 12:50 pm:

      @David Yes, usually. Financial aid offices can either send the funds to the new school, or will send the funds back to the scholarship provider who will then reissue the check to the new school. Check with both financial aid offices, as well as your scholarship provider to find out how this will work in your specific case.

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  13. Jennifer says on August 17, 2012 at 4:46 pm:

    I have a question. My son started an on line college and is not yet finished with his 1st semester. We are unhappy with the school and he wants to withdraw and look for another school. He has federal loans and a pell grant. His counselors said that unless he finished his 1st semester that he will have to start to repay over $9,000 within 45 days. My questions is, if he withdraws, is he able to get another loan for the new school and/or can he just transfer the loans to his new school once he finds on, or is it better for him to find a new school first. His finance advisor is very unwilling to help us and just states that he will have to repay asap. I am not sure if he should finish the semester and then transfer or not. My son does not want to take any more classes at the school at all. Can you please help?

    Reply To This Comment
    • Student Loan Guru says on August 20, 2012 at 1:13 pm:

      Students who drop below half-time enrollment typically have the full grace period (6 months) before repayment begins. If your son has completed over 60% of his semester, all funds are considered used and must be repaid after the grace period ends. If he withdraws before hitting this 60% mark, any unused funds will be returned by the school to the Department of Ed. and will not need to be repaid by the student. If your son enrolls at another school, he can once again defer his current loans.

      Eligibility for financial aid is determined by each school, so while he will probably be eligible for the same aid, the amount might differ.

      For now, your son can either finish out his current classes and get transfer credit, or withdraw and enroll at a new school. Keep in mind a withdrawal means you will be responsible for repaying the loans at some point, without getting credit for the classes.

      For the exact regulations regarding withdrawal, read http://ifap.ed.gov/fsahandbook/attachments/1112FSAHdbkVol5Ch2.pdf

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  14. Kyle says on August 17, 2012 at 11:03 am:

    I applied to a college, and they were taking a LONG time to accept me, so I went to an easier college, but now my first choice sent me an acceptance letter, so I am withdrawing. How will this affect me?

    Reply To This Comment
    • Student Loan Guru says on August 20, 2012 at 1:22 pm:

      Depending on the point in the semester when you withdraw, you will be required to repay the “used” portion of your loans when entering repayment. You can defer this while enrolled in school, but if you owe anything to your current school, you may not be eligible for aid at your new one.

      The withdrawn classes may affect your Satisfactory Academic Progress determination (meaning if you fail to meet SAP standards, aid can be witheld) – so check in the academic standards section of your school’s course catalog since SAP policies vary by school.

      Most transfer and withdrawal policies depend on your school’s regulations, so it’s best if you talk this over with both financial aid offices.

      Reply To This Comment
  15. Jon Russell says on July 14, 2012 at 11:45 am:

    This fall and spring semester I will be attending school part time (<12 credit hours) to take advantage of a program that will switch me over to an in-state tuition rate. Next year I expect to be returning as a full time student. Will I be obligated to make loan payments while going to school part time? I will almost certainly not be able to afford it.

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  16. Theresa says on July 8, 2012 at 12:45 am:

    Okay I have a question. I was enrolled at an online school and was receiving Financial aid, from what i have read and everything they paid the loan back to the department of ed. I withdrew from the school on May 2012and Well I am enrolling in another school one that i think will be better for me. I did recieve 18 credits from this school and was doing reallt good until I ran into some problems with the instructors not helping me, So I started failing then eventually dropped out. And that si when they officially had me as withdraw. But I am enrolling into another online school and I was wondering if I was able to still recieve Financial Aid.I do owe the school the 400$ will that affect my Financial Aid when I go to apply for this new school…I really hope it doesnt but i am a little scared that it will..I am a single mother and I am trying to better my education and my life by going to college…So basically what i am asking is will I bebable to recieve Financial Aid or no?

    Reply To This Comment
    • Student Loan Guru says on July 9, 2012 at 12:27 pm:

      You should be able to, though owing money to the previous school may be an issue. Schools can withhold transcripts and such from students until their bill is paid, making it difficult to register at a new school. You should talk with both financial aid offices to see if this will be an issue, because it depends on the schools’ policies.

      Reply To This Comment
  17. Casandra King says on April 9, 2012 at 2:22 am:

    I am currently enrolled at a community college. I got a federal pell grant and other scholarhsips but I have been in all my classes until now. I want to drop out but I don’t know if I will have to pay anything back since the semester is almost over it ends May 10.

    Reply To This Comment
    • Student Loan Guru says on April 11, 2012 at 4:47 pm:

      If you only have grants and scholarships, you shouldn’t need to repay anything. It’s if you had any loans that this would be a concern. I would talk with your school’s financial aid office to make sure there are no outstanding issues with your account.

      Reply To This Comment
  18. Kimberly says on March 30, 2012 at 1:16 pm:

    I am interested in returning to school.I was enrolled about 4 years ago to an on-line program. I went through a serious emotional trauma and was hospitalized for depression. During the time I was ill I did not participate in the online chalkboard for that semester/session but also did not drop the classes as I should have. I was placed on academic suspension…even though my grades up until that time had been excellent and my transcripts from my previous college GPA 3.8.

    To further complicate matters since I was on Financial Aid they refunded the $$ for the classes to the Government and the scholl charged me personally around $3500.
    I am a single Mom to 2 children and have no hope of ever being able to come up with $3500. I would like to return to school and finish my program of study but cannot afford $3500 for my transcript and if I dont return to school I will have to begin payments on student loan for degree I have not finished. Any Advice appreciated.

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  19. Rick says on February 23, 2012 at 11:14 pm:

    My wife in currently enrolled in a private Cosmetology School and is using two types of loans and some grants I beleive. The program lasts 14-16 Monthes and she has already completed 4 months. She is finding herself now in a hostile learning environment created by the faculty and certian students. What would be the consequences of temporary withdraw and how hard would reenrollment be?

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  20. Angela says on January 25, 2012 at 6:45 pm:

    I am currently not able to attend school this semester due to acaedmic probations. My question is, when I return to school in the fall will I still have to pay on my federal loans or will they end the payments until I leave school again?

    Reply To This Comment
  21. Liz says on October 26, 2011 at 5:11 pm:

    What if I have loans; never graduated so have only been able to find restaurant server jobs and haven’t made enough money to start paying back the loans and now they have gone to a Collection Agency. I am not sure what to tell them. I still don’t have much money and don’t have a better job to pay these back and can’t get another loan to go back to school because I have this outstanding loan debt. That is why I haven’t graduated. I feel like I am in a dead end circle and not sure what to do. Any ideas would be grateful! Thanks.

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  22. meriam says on October 18, 2011 at 12:38 pm:

    I am a freshman at a community college.. and I was wondering if I would have to pay anything to financial aid.. the date to withdraw from classes is november 3rd.. but i am thinking about withdrawing from school.. what could I do? and if I with draw from school.. how soon do I have to pay?

    Reply To This Comment
    • Student Loan Guru says on October 19, 2011 at 10:52 am:

      If you formally withdraw from the school, then you will begin repayment after your grace period (for most loans, this is 6 months). You should contact your financial aid office for the withdrawal process and to find out more specific information regarding the loans you may owe.

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  23. Morgen Marshall says on October 18, 2011 at 10:29 am:

    I’ve become disabled and unable to concentrate or learn. If I fail, or if I withdraw, what will happen?

    Reply To This Comment
    • Student Loan Guru says on October 19, 2011 at 11:10 am:

      @Morgen- If you leave school, any loans you “earned” during the course of semester will have to be repaid. Repayment usually starts at the end of the grace period (about 6 months after your official withdrawal date). To find out how much of your aid is considered earned, you will need to contact your financial aid office.

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    • Anonymous says on December 18, 2011 at 11:58 am:

      @ Morgen,

      If you were disable after you have acquired government loans for school, you may be eligible for a forgiveness of the loan. The only catch is that you cannot work (part-time of course) for a period of 5 years. I know someone who has graduated and disable, and they did not have to pay the loan back. You may want to contact the Dept. of Education for more details.

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  24. Andrew says on October 12, 2011 at 4:33 am:

    I withrew from my classes because it wasn’t the learning experience I was looking for, I am just halway through my first semester. What will happen to the financial aid I have recieved? Will it have to be repayed immediatley, or can I still make normal payments back?

    Reply To This Comment
    • Student Loan Guru says on October 13, 2011 at 8:32 am:

      For federal loans, your grace period will remain in tact when you withdraw or drop below half time. Depending on how much aid was used (as calculated by your school) your financial aid may all be returned to the Department of Ed. For private loans, it depends on your loan terms. You will need to contact your financial aid office or private loan lender to determine the details of anything that needs to be repaid.

      Reply To This Comment
  25. Jon Bowman says on October 10, 2011 at 1:34 pm:

    I am attending college online but need to transfer to another online school due to fraudulent activity on the part of my current school. I am attending solely on federal student loans.

    I was told that I would not have to start paying back my student loans until six months after I graduate. My question is: Since I will not be graduating from this school, if I withdraw and enroll at another school, will the withdrawal mean that I have to start paying back my loans? Or will I still have until six months after I graduate? Even though I switched schools? What is the proper way to withdraw and enroll in another school without defaulting on my loans or incurring fees?

    Also, the college I am currently attending has apparently already depleted all of the financial aid I qualify for ($57,500). Does running out of financial aid mean I will have to start repaying the loans? Or do I really have until I graduate?

    This is such a nightmare! When I enrolled, I was told by my school’s financial aid office I would have enough financial aid to complete my degree and not have to start repaying my loans until six months after I graduate.

    This was a lie.

    In reality, the degree (bachelors in Psychology) will cost a total of aprox. $68,000 and I will be out of financial aid at $57,500. So, the school received $57,500 dollars I will have to repay. I received nothing. No degree. And unless I can come up with another $10,000 to give them, I will not get it (assuming I would really even get it then).

    The school keeps offering me private loans to cover the remainder of earning my degree, but they have already lied to me and misappropriated at least one of my Pell grants. I feel like the best thing I can do now is transfer to another (cheaper)online college and transfer as many of my credits as they will take, and finish my degree out of pocket (although, I have no idea how I could raise the money).

    I feel like this college has completely scammed me and now the best I can do is get out of there. They are so completely dishonest I cannot see staying on the hook with them in any way.

    I will be extremely greatful for any answers anyone can provide to my questions above.

    Thanks so much.

    Reply To This Comment
    • Student Loan Guru says on October 11, 2011 at 10:52 am:

      There’s a lot of info here, so I’ll do my best to answer all of your questions.

      As long as you are enrolled in a degree program, your loans are able to be deferred until 6 months after graduation. This includes when you change schools. However, dropping out usually means repayment starts earlier than 6 months. In a transfer situation, you should submit an in-school deferment form to the Department of Education, just to make sure your loans do remain in deferment.

      Reaching your loan limit does not change the deferment status, and it will not require you to repay the loans any sooner. It simply means that you have reached the maximum amount of funds available to you through the government.

      Private student loans are not a bad option to help with the remainder of your education bill. Like federal loans, most are able to be deferred until 6 months after graduation. The main difference is that federal loans come with more benefits such as forbearance and a variety of repayment options and plans. You can learn more and compare your options privatestudentloans.com.

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