What you need to know about transferring mid-year if you have student loans

There are a lot of good reasons to transfer colleges. Perhaps you changed your mind about your career path, and now realize you’d be better served by a different school. Or maybe once you started college, you realized that the campus culture at your school wasn’t the right fit for you. Whatever your motivation, if you’re using federal or private student loans to help pay for your education, it’s important to know how a transfer could affect your funding so you can plan for a smooth transition.

Does your financial aid transfer with you to a new school?

The short answer is no. Most financial aid doesn’t transfer to a new school when you do. So what should you do?

• Reenroll ASAP. When you’re in college, most loans are automatically deferred, which means you don’t have to pay them back until some period of time after you stop being enrolled, known as the grace period. But when you transfer colleges, you’re unenrolling at your original school. So reenroll in your new school promptly; if you’re not enrolled anywhere at the end of your grace period, you’ll have to start paying back your loans.
• Avoid issues from the start. Once you’re enrolled at a new school, make sure that your loan lenders/servicers have your status listed as such.
• Stay eligible for aid. Sometimes switching schools means that it takes longer to graduate. Make sure you’re staying eligible for your federal loans by continuing to meet the criteria, making progress academically, and filling out the Free Application for Federal Student Aid (FAFSA®) each year.

Settling accounts with your original school

If you plan on transferring to a new school you will need to take care of some things at the first institution so there is an easy transition.

1. Notify the financial aid office about your intention to transfer. Make sure your account is fully settled.
2. Fill out paperwork. If you’re making a mid-year switch, you may need to officially withdraw and cancel any remaining financial aid disbursements.
3. Contact your private lender. If you have a private student loan, you’ll have to contact your lender for any adjustments to your current loan. Your current loan will not transfer to your new school.
4. Find out about 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.

Applying for financial aid at your new school

1. Update your FAFSA. If you have federal Direct Subsidized or Unsubsidized Loans, you may only need to update your FAFSA with the new Federal School Code. From there, your new school receives the updated FAFSA information and awards aid accordingly.
2. Figure out additional funding. Take advantage of the types of financial aid that don’t need to be paid back, like grants and scholarships. You can use a free online search tool to help you find scholarships for current college students. If you relied on a private student loan at your old school, or if you need more money to fund your education at your new one, you can also apply for a new private student loan.
3. Don’t expect an identical aid package. Keep in mind you may not receive the same amount of financial aid at your new school. 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 simply be fewer funds available to award.
4. Find out about timing. It’s also 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.

Your best resource

If you’re transferring schools, there is some paperwork to do to wrap up loans at your old school and make sure you have enough money to cover your costs for your new one. Fortunately, colleges are used to dealing with transfer students, and the financial aid offices at both schools will guide you through the process and answer any questions.

^{FAFSA® is a registered trademark of the US Department of Education and is not affiliated with Discover® Student Loans.}