Transferring Student Loans: University Switch Impact Explored

Transferring colleges is not always a seamless experience, and managing your student loans is an extra layer of stress. Student loans do not transfer between schools, so you will need to resubmit your FAFSA form. You will also need to take care of your existing loans, and notify your lender of your status as a full-time or half-time student to avoid accidentally going into repayment.

Resubmitting the FAFSA form

If you are transferring to another university, you will need to resubmit your FAFSA form. This is because student loans do not transfer between schools. However, if you are transferring mid-year, you won't need to start a new form from scratch. Instead, you can access the FAFSA already on file and resubmit it with your updated school choice.

• Log in to your FAFSA account: Go to the official FAFSA website and log in to your account using your credentials.
• Access your submitted FAFSA form: Once you are logged in, find and access the FAFSA form that you previously submitted.
• Make necessary updates: Update your school selection to reflect your new university choice. You can also make any other necessary changes, such as updating your demographic or financial information.
• Review and resubmit: Carefully review your updated FAFSA form to ensure all the information is accurate and up to date. Then, resubmit the form.
• Confirm submission: After resubmitting, you should receive a confirmation. Make sure to keep this confirmation for your records.

It is important to note that while your financial information from the previous form will remain the same, the financial award offered by your new university may differ. This could be due to variations in tuition fees, available aid, and other factors. Therefore, it is recommended to speak with a counsellor at your new university to understand how these changes might affect your finances.

Additionally, remember that you will still be responsible for any existing student loans from your previous university. Ensure that you address these loans as part of your transfer process. Notify your student loan lenders of your transfer and make the necessary arrangements for repayment or deferment.

Financial award changes

When transferring colleges, your financial aid package will not automatically transfer to your new school. This means that you will need to reapply for financial aid and your new package may differ from your previous one.

Reapply for financial aid

To ensure your new school considers you for financial aid, you should:

• Double-check your school's federal financial aid participation status. Ask the school if it participates in "Title IV" federal student aid programs.
• Complete the FAFSA (Free Application for Federal Student Aid). 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.
• Keep your new school in the loop. Touch base with your new school about your transfer plans and follow up to see if there is any additional documentation or information they need.
• 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, you can appeal the award.

Financial aid package may differ

Your new financial aid package may differ from your previous one. The amount of money you receive in scholarships, grants, and certain types of federal student loans depends on the school's cost of attendance and any merit aid it decides to give you. The costs of the two schools could vary, affecting how much aid you're eligible for, and the schools likely have different aid programs and resources. If you transfer mid-year, there may be fewer funds available.

Private student loans

If you have a private student loan, you will need to contact your lender to inform them of your switch. Your current loan will not transfer to your new school.

Scholarships

If you have a scholarship, it may or may not be portable to a different school, depending on the details. However, some schools may have scholarships specifically for transfer students.

Federal student loans

If you have federal student loans, you can update your FAFSA with the new Federal School Code. From there, your new school will receive the updated FAFSA information and award aid accordingly.

Additional funding

You can take advantage of the types of financial aid that don't need to be paid back, like grants and scholarships. You can also apply for a new private student loan if you need more money to fund your education at your new school.

Timing of loan disbursements

It's important to check in with your new school to find out about the timing of loan disbursements. Transferring mid-year may affect the schedule; due to a multiple disbursement rule, your school may release money to you at two separate times during the semester. If you're using loans to pay for non-tuition costs, like living expenses and books, this could impact your ability to cover those.

Addressing existing loans

When transferring colleges, it's important to address any existing student loans. Here are some key considerations and steps to take:

Notify Your Lenders:

Inform your student loan lenders about your plans to transfer to another university. This is especially important if you're transferring in the middle of an academic year. Contact your lenders to cancel any pending funds that are still pending or expected to be disbursed to your current school.

Understand Your Loan Responsibilities:

Remember that you are still responsible for repaying the student loans you borrowed for your current school. Even if you transfer, those loans don't disappear, and you'll need to continue making payments or manage the repayment process.

Deferment and Repayment Status:

If you will be enrolled as a full-time or at least half-time student at your new university, you may be eligible to defer your existing student loans. Notify your lenders about your enrolment status at the new university to avoid any impact on the repayment status of your loans.

Manage Existing Loan Disbursements:

Student loan funds are typically sent to the school in instalments, usually at the beginning of each semester. If you're transferring mid-year, ensure that you manage any pending disbursements to your current school to avoid complications.

Exit Counselling:

Before you officially leave your current university, participate in exit counselling for your loans. This informational session will guide you on how to handle your student loans after transferring or dropping below half-time enrolment.

In-School Deferment:

To avoid starting student loan repayment while still in school, you can request an in-school deferment on your federal direct subsidized or unsubsidized loans. Keep in mind that interest may still accrue during the deferment period, increasing your overall loan balance.

Refinancing and Consolidation:

If you're considering transferring your student loans to a new lender, explore options like refinancing or consolidation. Refinancing involves taking out a new loan with a private lender, which can offer lower interest rates and different repayment terms. Consolidation allows you to combine multiple federal student loans into a single loan with a fixed interest rate.

Remember to carefully review the terms and conditions of any new loan or refinancing option before making a decision. Each option has its own advantages and potential drawbacks, so it's important to understand how they may impact your financial situation.

New school costs

When considering transferring to a new school, it's important to be aware of the financial implications. Here are some key points to keep in mind regarding the costs of attending a new school:

• Resubmitting your FAFSA: When transferring to a new school, you will need to resubmit your FAFSA (Free Application for Federal Student Aid) form. This will help determine your eligibility for financial aid and expected family contribution. Remember that your financial award may change, depending on the details of your transfer and the policies of your new school.
• Cost of attendance: The cost of attending your new school will impact your overall expenses. Transferring to a more expensive school may result in higher costs, while choosing a less expensive school could reduce your financial burden. Make sure to compare tuition fees, housing costs, and other related expenses to understand the financial implications of your transfer.
• Financial aid package: Every school calculates financial aid packages differently. Your new school may offer more or less aid than your previous institution. Review the financial aid package offered by your prospective school carefully and determine how much you and your family will need to contribute.
• Additional loans: If your new school is more expensive or offers less financial aid, you may need to take out additional loans. Understand the differences in costs and explore your loan options, including federal or private loans, to make an informed decision.
• Calculating costs: To avoid over- or under-borrowing, calculate exactly how much you need to cover your expenses. This will help you manage your debt effectively and potentially save money in the long run.
• Scholarship and grant opportunities: In addition to loans, research scholarship and grant opportunities that may be available at your new school. These can help offset the cost of attendance and reduce your overall financial burden.
• Housing and transportation: Consider the cost of living in the area of your new school, especially if you're moving to a different city or state. Factor in expenses such as housing, transportation, and other daily living costs when calculating the overall cost of attending your new school.

Remember to speak with a school counselor or a financial aid expert to get personalized advice and ensure you understand all the financial aspects of transferring to a new school.

Federal vs private loans

Student loans cannot be transferred between schools, so if you switch colleges, you will need to resubmit your FAFSA form. This will not change your eligibility for financial aid or your expected family contribution, but your financial award may change.

Now, here is an overview of federal vs private loans:

Federal Student Loans

Federal student loans are provided by the government. They are generally preferable to private student loans because of the benefits and protection they offer to borrowers. They are known for their loan forgiveness options, and they also offer access to income-driven repayment plans. There is no credit check required for most federal student loans, and they are generally less expensive than private student loans. However, they may have lower loan amounts than private loans, and there are upfront fees and loan limits to consider.

Private Student Loans

Private student loans are provided by banks, credit unions, and other financial institutions. They usually require a credit check and may have higher interest rates than federal loans. Private student loans can be a good option if federal loans are not enough to cover educational costs. They offer higher loan amounts and more flexible loan terms than federal loans. However, there is a lack of protections with private student loans, and they do not offer student loan forgiveness programs.

Federal vs Private: Which is Best for You?

Whether you should get a federal or private student loan depends on your financial situation and repayment options. Federal student loans are generally the best starting point because of their benefits and protections, but private loans can be a good option if you have maxed out your federal loan limit or if you are a graduate or professional student with a solid credit score.

Frequently asked questions