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Knowledge Hub / How to Transfer Schools With Student Loans
How to Transfer Schools With Student Loans

How to Transfer Schools With Student Loans

Living with Student Loans Paying for College
ELFI | May 23, 2022
How to Transfer Schools With Student Loans

Many students need to transfer schools after beginning their education. If you’re one of them, you’ll want to make sure you understand the rules for student loans when transferring schools.  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 money you need. 

What’s involved in transferring student loans to another school

If you’re wondering how to transfer student loans to another school, here are the steps you will need to take to get financial help paying for your new program. 

Update your FAFSA

If you are interested in transferring student loans to another school, you should be aware that a direct transfer of funds is not possible. Instead, you will 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), the 2022-2023 application is linked here. The FAFSA is available online, so it’s easy to complete it. You will need to provide your financial information when submitting this form, including details about your income, savings, and assets, as well as details about your parents’ earnings and accounts if you are a dependent student.  The FAFSA is the key document required to be eligible for any federal financial aid, including student loans from the Department of Education and funds from work study programs. Many schools and state programs also rely on the FAFSA to determine eligibility for scholarships and grants.  The information that you provide on the FAFSA will be used to create a new financial aid package for your new educational institution.  

Understand the rules for transferring student loans to another school mid-year

If you are transferring mid-year instead of at the start of a new semester, then the process for getting new student loans when transferring schools is slightly different.  You will be able to access the FAFSA that is already on file for the current academic year. If your financial details are the same as when you originally applied for aid, you do not need to complete entirely new forms just because you are transferring schools. Instead, you can just update the document with your new school and can resubmit the existing FAFSA with this update.  Student loan funds are also typically sent to schools in large lump sums at the start of each semester. If you are doing a mid-year transfer and have funds pending that were scheduled to be delivered to your old school, notify your lender not to disburse those funds.

Report your new enrollment status to student loan lenders

Typically, dropping below half-time enrollment can trigger an obligation to begin repaying your student loans after a short grace period. To avoid being forced to start repaying loans, notify all existing lenders that you are transferring schools.  Under the rules for student loans when transferring schools, most lenders will allow you to 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. 

Be aware your financial aid package could change

If you’re trying to determine how to transfer student loans to another school, it’s important to realize that you won’t necessarily get exactly the same amount of aid or incur the same costs after you switch programs.  See, your new school could cost more or less than your current academic program. Many factors could affect how much 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 may offer more or less financial aid, or you may have already used up eligibility for some aid, such as Perkins Loans

Know the rules for student loans when transferring 

As you can see, figuring out how to transfer student loans to another school is more complicated than you might think because you don’t necessarily get the same amount of financial help, and your costs may differ. You’ll want to be sure you understand the types of aid you could be eligible for to help pay for your new program and that you know the estimated costs you’ll have to 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 may cost more doesn’t mean a transfer isn’t worth it. You’ll want to look at the big picture, including your job prospects after graduating and the types of aid you can access. And remember, you may have the option 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. If you want to refinance, use ELFI’s student loan refinancing calculator to see how much you could save.* By learning the details about funding your education, you can make the best choices that will pay off both now and in the future.