The federal government dictates if you drop out before the 60% point of the semester, you will have to repay part of the grants you've received. If you wait until the 60% mark or after, you won't have to repay any grants you've received.
Dropping a class with financial aid won't necessarily affect your FAFSA and financial aid award. If you're taking extra classes, for instance, you could probably afford to remove one from your schedule.
But what happens to unused student loan money that's left over? It usually gets sent to you, at which point you can decide whether to keep it for living expenses or return it to your lender. Here are three things to consider as you make your decision: Why you might have money left over from financial aid.
Not only will your credit score sink, but your cosigner will be legally responsible for taking over the debt. Unless they pay the loan, their credit score will also drop, making future loans more difficult for them to land.
Don't accept too much federal aid money College students can have their federal financial aid taken away if they've previously accepted more money in financial aid than the government committed to.
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.
An unpaid tuition bill can also end up in collections. Your school may have its own collection department or it may sell unpaid tuition debt to a collection agency. If collections aren't resolved and the amount owed paid, your school may choose to take legal action.
Student loans don't go away after seven years. There is no program for loan forgiveness or cancellation after seven years. But if you recently checked your credit report and are wondering, "why did my student loans disappear?" The answer is that you have defaulted student loans.
Contact the lender to tell them you want to cancel - this is called 'giving notice'. It's best to do this in writing but your credit agreement will tell you who to contact and how. If you've received money already then you must pay it back - the lender must give you 30 days to do this.
We've got your back! Fortunately, you can return unused student loan money to your lender, though timing and loan type could determine how much it will cost you. Returning some or all of a federal loan within 120 days wouldn't cost a dime in interest or fees.
Notice of withdrawal can be given in writing or verbally, but you will have to repay the capital and interest accrued between taking out the loan and repayment.