For federal loans and many private lenders, your status changes when you drop below half-time status—half of the expected full-time course load. The lender will mark you as withdrawn from school, and your loans enter repayment. Even if you continue taking one course a semester, lenders will change your repayment status, with payments becoming due.
Whether or not to drop a course is an academic issue; however, it is your responsibility to understand the financial implications of this decision. If you drop below enrollment, you may be ineligible for aid, including loans. Depending on the time during the semester that you drop a course(s), your aid may be adjusted.
Unfortunately, if you drop out, your student loans are not just going to disappear. You are going to need to pay them back. The graph below will give you a rough idea of how much you might expect to pay under different plans. Obviously, your repayment plan will be based on your specific circumstances.
So if you have PLUS loans or your parents took out PLUS loans for your education, there’s a lot less wiggle room than if you have other types of federal loans. While one dropped class may not initiate the grace period on your student loan payments, it can definitely affect your life.
Dropping credits may jeopardize future student aid eligibility, including loans. Whether or not to drop a course is an academic issue; however, it is your responsibility to understand the financial implications of this decision.
In most cases, one dropped class won't affect your student loans. However, there's a certain course load you have to meet if you don't want the monthly payments to start on your student loans.
Federal regulations require you to repay a portion of financial aid funds if you withdraw from all classes before satisfying the 60 percent completion rule for the enrollment term. (See the current 60 percent dates for the financial aid award year.)
So before you withdraw, just know it can have a domino effect when it comes to your financial aid. Simply put, your school will have to return federal and state funds, while canceling others. And ultimately, you will lose eligibility for certain funds you will still have to pay back any outstanding loans.
Failing & Then Re-Taking a Class Croskey notes that dropping a class is better than withdrawing, but withdrawing is better than failing. “A failing grade will lower the student's GPA, which may prevent a student from participating in a particular major that has a GPA requirement,” Croskey says.
You'll need to get out of default before you can receive aid again.
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