What Happens to Financial Aid If You Drop a Class?

Dropping a class may or may not impact your financial aid eligibility depending on how it affects your academic progress and your enrollment status. To know what happens to financial aid if you drop a class, it helps to first understand the requirements to qualify for financial aid. This only applies to federal financial aid.

Consider doing financial awareness counseling after you took out a federal student loan

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Federal Student Aid Eligibility Criteria

When you first start college, your federal student aid eligibility is based on the details submitted through the FAFSA (Free Application for Federal Student Aid). Making ‘satisfactory academic progress’ toward completing your degree is one of the requirements you must meet to maintain that eligibility through the remaining years in college. This includes eligibility for grants, scholarships, work-study, and federal student loans.

The exact definition of satisfactory academic progress may vary among schools with each school setting its own standard. Generally, it means you need to take enough classes and earn high enough grades to graduate within a reasonable time period.

Each school sets its own guidelines for what constitutes satisfactory academic progress, including:

  • How many credits you must complete every academic year.
  • Minimum GPA you need to maintain.
  • How your progress may be affected by dropped or incomplete classes.
  • What happens if you don’t meet the satisfactory progress requirements.

In most cases, you could lose your eligibility for financial aid if dropping a class means you’re no longer maintaining satisfactory academic progress, or it puts you below half-time enrollment. However, if the decision doesn’t affect your satisfactory academic progress and you maintain at least half-time enrollment, you won’t lose student loan eligibility.

How Dropping a Class Impacts Enrollment

One of the requirements to qualify for federal student aid is that you must be enrolled at least half-time at an eligible educational institution. Schools may vary in what they consider half-time enrollment. Generally, half-time status means having a minimum of six credit hours.

If, after dropping a class, you still have enough credit hours to maintain half-time enrollment, it won’t affect your financial aid eligibility. However, if you fall short of the minimum credit hours required to maintain half-time enrollment, you’ll lose your financial aid eligibility. You will regain your eligibility when you meet the required minimum threshold.

Two important things you should note here:

  1. If you drop a class and lose your half-time status, your student loan repayments will come due earlier. Instead of six months after graduation, your loan repayments will come due six months from the date of losing your half-time status.
  2. If you qualify for Pell Grants and you don’t meet the minimum full-time threshold, you won’t receive the full amount you qualify for.
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How Dropping a Class Impacts Satisfactory Academic Progress

Satisfactory academic progress is a requirement for maintaining eligibility for federal financial aid.

Generally, your financial aid won’t be affected if you drop a class by the add/drop deadline. Your financial aid will only be affected if you wait until after the deadline to drop a class. Some schools may allow you to drop a class in the first or second week of the semester without consequences. After two weeks the schedule is set and you could then lose credits as well as your financial aid eligibility if you drop a class after that period.

As we said earlier, each school sets its own criteria for assessing satisfactory maintenance. Most consider your GPA and progress toward your degree among other factors.  It’s best to speak to your school’s financial aid office to find out the minimum credits you need to take each semester to stay eligible for financial aid. You’ll also need to find out the minimum GPA you need to earn to maintain financial aid eligibility.

Important note: If your failure to meet academic progress requirements is due to unavoidable circumstances such as an injury, illness, or death of a family member, you may be able to appeal your school’s decision.

What Happens to Financial Aid if You Withdraw from All Classes?

There is a difference between dropping a class and withdrawing from a class. Every college sets a deadline for adding or dropping classes. This may be set every semester or every quarter depending on the school. If you drop a class after the deadline, it’s considered a withdrawal.

Withdrawing from all classes for the remainder of the academic term can have three major consequences when it comes to financial aid.

  1. You may lose eligibility for all types of federal financial aid in the future. Withdrawing from all classes means you’re no longer maintaining satisfactory academic progress, which is a mandatory requirement.  You can earn back your eligibility in the future by filing an appeal after re-enrolling in the required classes.
  2. Your student loan repayments still come due even before you graduate. If you withdraw from all classes, you won’t be eligible to graduate. That means you’ll also lose that six-month grace period after graduation before repayments become due. Instead, your repayments will start six months from the date of withdrawal from your classes unless you get back to half-time status.
  3. You may be asked to return some of the financial aid you’ve received. Your school will calculate how much financial aid you need to return either to the school itself or to the Department of Education. You’ll only be allowed to keep what you earned based on the percentage of the term you attended school.  You’ll have to return the rest immediately.

What Happens to Financial Aid If You Fail a Class?

For the most part, your financial aid won’t be affected if you fail one class but have an excellent academic track record before that. This is because, with a strong academic track record, your GPA would be strong enough to help you maintain your eligibility. Under these circumstances, it should be relatively easy for you to recover your GPA and requalify for financial aid.

Generally, you would risk losing your financial aid eligibility under these two circumstances:

  1. If your GPA drops before a certain minimum threshold.
  2. If you haven’t maintained satisfactory academic progress through multiple semesters in college.

What To Do If You Lose Financial Aid Eligibility

In most cases, you will be able to regain eligibility by getting back on track academically. This may involve adding classes to your schedule to maintain half-time status and boosting your GPA. Most schools require students to maintain at least a 2.0 GPA on a 4.0 scale.

Regardless of why you’ve become ineligible for financial aid, it’s always advisable to speak to your school’s financial aid office before doing anything else. They will tell you exactly what you need to get back in good standing and regain eligibility. And if you had to drop a class or withdraw due to extenuating circumstances, find out about filing an appeal so you can get access to financial aid immediately.

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