You can keep your student loans if you transfer to a different school.
Many students will find they need to change schools at some point during their college careers. Transfers can occur because your school does not offer the right majors, closes programs, shuts down or simply because it is not the right fit for you. In any of these cases, your student loans can go with you to your new school. However, you may need to reapply for financing to keep your loan.
Structure
Most lenders approve student loans only after knowing the exact cost of tuition in any given semester. For example, a student does not receive a $10,000 credit line to apply how he or she pleases. Instead, the student applies for the loan, receives approval up to a certain amount, and then reports which classes and fees he or she would like to apply toward this amount each semester. The lender cuts the check in the amount required to the university or college. Certain private loans may operate differently. However, all federal and state loans go directly to the college in the amount required for classes in one semester.
Federal or State Loan Transfer
When you decide to transfer, it will affect the cost of your education. You will need to adjust your loan amount. If you have a federal loan, you will need to fill out a new Free Application for Federal Student Aid (FAFSA) to get financing at the new school. The Department of Education will need to verify that your new program qualifies for financing. State loans operate in much the same manner, but the exact process depends on your state.
Private Loan Transfer
If you have a private loan, you will need to notify the lender and ask the procedure. In most casts, the lender will need to verify that your degree program qualifies for its loans. You may need to reapply for financing, but if nothing has changed about your financial situation or the type of degree you pursue, you should receive a comparable loan offer.
Considerations
You may have challenges maintaining your financing if you change from a two-year degree to a four-year degree or vice versa, or if your transfer will result in additional credit hours beyond your original degree requirements. Other challenges can occur if your new school is not accredited or is private while your other school was public. Generally speaking, the more similar the school you transfer to, the easier the loan transfer process. Transferring to a completely new type of school will complicate matters. If you transfer mid-semester or after you have already paid for classes, there will be additional challenges. The school may need to refund the loan to your lender before the lender qualifies you for another loan.
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