Many students choose to transfer schools after beginning their education. If you’re one of them, understanding the rules for student loans when transferring schools is important.
Unfortunately, transferring student loans to another school isn’t possible. So if you plan to continue relying on financial aid to help you cover your education costs at your new school, there are a few key steps you need to take to make sure you have the funds you need.
What Involved in Transferring if You Have Student Loans
If you’re wondering how to transfer student loans to another school, here are the steps you’ll need to take to get financial assistance for your new program.
1. Updating your FAFSA
If you are interested in transferring student loans to another school, know that a direct transfer of funds isn’t possible. Instead, you’ll need to reapply for financial aid for your new program. If you’ll be transferring at the beginning of a new academic year and need to fill out a new Free Application for Federal Student Aid (FAFSA).
Be prepared to provide your financial information when submitting the FAFSA, including details about your income, savings, and assets, and your parents’ earnings and accounts if you are a dependent student. Your FAFSA information will determine your eligibility for federal financial aid, including student loans from the Department of Education, scholarships, grants, and funds from work study programs. Your school will use your FAFSA to create your financial aid package.
2. Understanding the rules for transferring student loans to another school mid-year
If you’re transferring mid-year instead of the start of a new semester, then the process for getting new student loans for your new school is slightly different. Your first step is accessing the FAFSA already on file for the current academic year. If your financial details are the same as when you originally applied for aid, you don’t need to complete new forms just because you’re transferring schools. Instead, you can just update the document with your new school and resubmit your existing FAFSA with this update.
The Department of Education typically sends your federal aid to schools in large lump sums at the start of each semester. If you’re doing a mid-year transfer and have pending funds scheduled to be delivered to your old school, tell your lender not to disburse those funds.
3. Reporting your new enrollment status to student loan lenders
Dropping below half-time enrollment typically triggers an obligation to start student loan repayment after a short grace period. To avoid being forced to start repaying loans, notify all existing lenders you’re transferring schools. Under the rules for student loans when transferring schools, most lenders will let you continue to defer payments on your debt even after switching academic programs—as long as you’re attending for enough credit hours. So you’ll need to make sure your lenders know you’re enrolled in a new school.
Understand Your Financial Aid Package Could Change
If you’re trying to figure out how to transfer student loans to another school, it’s important to realize you won’t necessarily get exactly the same amount of aid or incur the same costs after switching programs. For example, your new school could cost more or less than your current academic program.
Many factors could impact your education costs after transferring, including the tuition at your new school, the cost of living in the area, and other fees you incur. The amount of financial help you receive may also differ. Your new school might offer more or less financial aid, for example, or you may have already used up eligibility for certain types of aid.
Transfer Schools With Confidence
Transferring your student loans to another school is slightly complicated because you won’t necessarily get the same amount of financial assistance from both schools. Be sure you understand the types of aid you could be eligible for to help pay for your new program as well as the estimated costs you’ll pay out of pocket after making a switch. Knowing whether or not a transfer will force you to incur additional expenses can help you decide whether changing schools is really right for you.
Of course, just because a new school costs more doesn’t mean a transfer isn’t worth it. Look at the big picture, including your job prospects after graduating and the types of aid you can access. And remember, you might be eligible to refinance student loans to make repayment easier. This involves applying for a new loan with more favorable terms and using the funds to repay existing debt. It can be an especially good choice if you have private student loans and can qualify for a refinance loan at a lower interest rate.
