What happens to your financial aid if you transfer schools?

When you transfer to a new college or university, financial aid funds do not automatically transfer with you. There are a variety of reasons for this, including that the aid is typically based on the school you were enrolled in.

If you’re relying on financial aid to help cover the cost of higher education, it’s important to understand how transferring schools may impact your aid package and the steps to take if you want to receive continued assistance.

What happens to your financial aid when you transfer schools?

When you transfer to a new school, you typically must withdraw from the old one first. At the time of your withdrawal, your current financial aid package may end.

Since aid is distributed based on the school you attend, most forms of financial aid that were in place at your former school will stop, and they probably won’t move to your new school with you — at least not automatically. You may need to work with the new school’s financial aid department, private lenders and possibly others if you hope to receive financial assistance for your future studies.

Why your aid amount might be different when you transfer schools

Your new school might not issue the same amount of aid as your former school, so it’s highly unlikely that your new financial aid package will match your former one when you transfer. Here are a few reasons you might receive a different amount of aid at a new school:

• Federal student loans have annual loan limits. Because the federal government limits how much you can borrow in federal loans every year, you might not have enough available funds left when you transfer schools to cover the cost of additional tuition.
• You cannot receive more than the total cost of attendance. In general, you cannot receive more than your school’s cost of attendance through scholarships, grants and student loans. This means that if your new school has a lower cost of attendance, your loan amounts, grants or scholarships could be reduced.
• Work-study options may not be available. If you were participating in work-study at your former school, you may not be able to carry that aid over to your new school. Work-study availability varies from school to school, and work-study is typically distributed on a first-come, first-served basis — so students transferring in the middle of the academic year may not be able to benefit from the program, if one exists at all.
• Some institutions may prioritize incoming first-year students. Where financial aid is concerned, a school may focus on providing available financial aid to first-year students. As a result, less financial aid may be available for transfer students who may be put at the back of the distribution line.

How to get federal aid when transferring to a new school

If you’re currently receiving federal student aid, you’ll need to take action to maintain those funds when you transfer schools.

1. Confirm that your new school participates in federal student aid programs. Many schools in the U.S. participate in federal student aid, but there are exceptions. If your new school doesn’t participate, you won’t be able to transfer your federal aid, such as a Pell Grant or federal student loans. You may have to find other ways to manage the cost of college, like private student loans or scholarships.
2. Update your FAFSA. Even if you’ve already submitted your FAFSA, you’ll need to update it with your new school’s information by the deadline. Available aid may differ, as each school has different amounts that are available to students.
3. Review your new aid offer. After you update your FAFSA, your new school should contact you with a new financial aid award letter. You can then review this letter and accept any offered aid.
4. Contact your current school. Your current school’s financial aid office should be able to assist you with any questions regarding your transfer. Ensure that your account is fully settled before transferring. If you are transferring midsemester, submit a withdrawal request to cancel any future disbursements. You’ll still be responsible for repaying any past federal student loan disbursements.

Do transfer students get less financial aid?

The amount of financial aid you receive could go up or down when you switch to a new school. Some institutions may prioritize incoming first-year students where financial aid is concerned. As a result, less financial aid may be available for transfer students who might be put at the back of the distribution line.

Timing may also be a factor — students transferring while an academic year is in progress may miss out on more limited forms of aid that are given to students who apply early. If this is the case, you may need to supplement with additional federal or private student loans until your financial aid package is renewed with a new semester.

Will my loans enter repayment if I transfer schools?

When you withdraw from school, even if you’re planning on enrolling elsewhere, your lender will receive a notice of the change. This could send your loans into repayment — most loans enter repayment once you withdraw or drop below half-time enrollment.

With that said, the federal government will typically place loans back into deferment status when you enroll in a new eligible academic program. If it doesn’t, you may need to initiate a request to put your loans back into in-school deferment status.

Private student loans may have stricter guidelines, but typically there are similar in-school deferment programs available. If your lender isn’t notified about your new enrollment automatically, follow up and ask about your options.

Bottom line

Transferring from one school to another when you rely on financial aid requires careful planning. Aid packages don’t automatically transfer from one school to the next, and the amount of aid you receive at your new school may not be the same as what you previously received.

When making such a big move, be sure to reach out to the new school’s financial aid department to help make the transition easier. Find out whether the school participates in federal student aid programs and what actions you need to take to continue to receive the funds you need.