Mall people drop out of college in the United States without a degree, but may not know what that means for their student loan. Read on to make sure you know how quitting can affect your loan status.
Withdrawing from college before earning a degree is actually quite common. In fact, only 62% of students earn a bachelor’s degree within six years of starting their studies.
Not having a degree doesn’t absolve you of your student debt, however, and you could suddenly find yourself having to make repayments. Only in very rare cases will your loan be forgiven if you give up.
What happens to my loan if I drop out of college?
If you drop out of school, in most cases you will need to start repaying your loan. However, some lenders may grant a grace period of six months.
Make sure you know the terms set by your lender, as they vary. Normally federal loans will have a grace period, but this may not be the case for private lenders.
In many cases, you will also have to pay back any grants you have been awarded if you drop out. This may be proportional to the time you have spent studying on the scholarship.
What happens if I reduce my studies to less than half-time?
Although you might think that only graduating or dropping out would result in refunds, you need to be careful. If you started out as a full-time student, but then reduce your workload to less than half-time, that often means you need to start paying off your loan.
For federal and private loans, it is usual to go below halftime to count as a withdrawal from college. Therefore, repayments will begin, but, again, there will often be a six month grace period before you have to start paying.
What can I do if I can’t afford to repay my student loan after dropping out?
- Apply for an income-based repayment plan
- Request an abstention or postponement
- Contact your lender
- Refinance your loans