Student loan money after you drop all your classes
August 28, 2006 7:30 PM   Subscribe

What happens if someone gets a stafford loan disbursement, receives the money and then drops all their classes?
posted by drezdn to Work & Money (6 answers total) 1 user marked this as a favorite
 
They impede someone who's more deserving from getting the money.
posted by furtive at 7:35 PM on August 28, 2006 [1 favorite]


Basically...

* If you have a loan/financial aid that's planned for the next semester, it's cancelled automatically and will be turned down for financial aid if you return, unless you appeal.

* Your college (or you) must return the "unearned" portion of the loan to the agency who gave the loan immediately. If you made it through the 60% date of the class, you earned the entire loan. Your college probably has signs posted about what the "Last Day To Withdraw" is. That's the 60% date. There is a formula to figure out how much was earned and what must be returned and in which order.

* Your loan payments will begin six to nine months after you drop your classes (or even drop from full to part time).

* You may also owe your college money if they had to return substantial amounts of money to loan programs. This is to off-set the loss of financial aid dollars that could have went to other students.

Here's a college in TX's financial aid site that has examples of the formulas used to determine what a student owes when they withdraw.

And a PDF from the US government about Borrower's Responsibilty. You can also call them with questions at 1-800-4-Fed-Aid.
posted by aristan at 7:57 PM on August 28, 2006 [1 favorite]




Please note, furtive, that Stafford loans are only federal guarantees for lower interest, and not cash on the barrel, like Pell grants.
posted by Gilbert at 7:59 PM on August 28, 2006


They're not kidding about that grace, either. 5+1/2 months later I got a repayment booklet.
posted by cowbellemoo at 8:30 PM on August 28, 2006


Not a financial aid counselor.

You signed a promissory note with a lender (go back and read the fine print since that may have the answer). I'd say you're on the hook for the money, but this thread may be of some service. You didn't really give us info as to why, whether you plan to return, etc. I'm assuming that makes a difference somewhat but I have no idea.

Chances are, you'd at least have to pay back the university (as aristan mentions), though if you completely leave the university, it could be that you'd owe the lender. You owe someone that money. It is not a gift.
posted by ml98tu at 6:28 AM on August 29, 2006


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