The Effects of Withdrawal on Financial Aid

by Morgan Rush ; Updated July 27, 2017
Withdrawing from classes can have serious effects on your ability to apply for financial aid in the future.

Financial aid helps students cover college costs, but there are strings attached. Withdrawing from classes almost certainly means that those strings will be tugging, since your enrollment status will have changed. Before making the serious decision to withdrawn from classes, examine the potential of effects of withdrawal on financial aid to determine whether this is the right choice for you.

Enrollment Status

Financial aid is often assigned based on your enrollment status. There are exceptions, but typically full-time students will receive larger aid amounts compared with students enrolled half-time or three-quarter time. Withdrawing from some classes can drop you into part-time status if you were a full-time student beforehand. Withdrawing from all classes will definitely affect your financial aid status. If you were enrolled in 18 units and dropped a 3-unit class; however, it’s likely that the federal government and your school will still consider you to be a full-time student.

Academic Progress

Withdrawing from classes can also affect financial aid because your academic progress may be compromised. In allocating financial aid, the federal government wants to see clear signals that you’re progressing toward completing a degree. Excessive dilly-dallying, including taking too few units or regularly withdrawing from classes, can prevent you from making what’s called “satisfactory academic progress,” resulting in being placed on academic or financial aid probation.

Returning Funds

If you withdraw from some or all of your classes, you may be required to return or repay financial aid disbursed earlier that semester. Accepting financial aid means committing to completing the course loads you indicated when filling out the FAFSA, or Free Application for Federal Student Aid. The same is true for private financial aid sources. Not finishing classes means that your benefactors or lenders want their money back.

Future Eligibility

If you fail to repay financial aid, you may become permanently ineligible to receive financial aid in the future. Students who do promptly repay financial aid may still be placed on financial aid probation, or listed as temporarily ineligible to receive financial aid. To be reinstated, you may need to fill out a form provided by your school explaining why you would like to be reconsidered for financial aid despite having previously withdrawn from classes.

Deferment Status

Another effect of withdrawing from classes on financial aid is that your existing student loans will enter repayment status. Student loans are often placed in deferment status while students attend school, since not all students will be working and able to make payments on their loans. Entering repayment status means that you become liable for repaying student loans following a traditional grace period (which may vary depending on your lender). Missing student loan payments can have serious effects, including hits on your credit score, having accounts turned over to a collection agency and being denied financial aid in the future.

About the Author

Morgan Rush is a California journalist specializing in news, business writing, fitness and travel. He's written for numerous publications at the national, state and local level, including newspapers, magazines and websites. Rush holds a Bachelor of Arts from the University of California, San Diego.

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