If you take a leave of absence from college, your financial aid may be affected, and in some cases, you may have to repay part of the aid you already received. The exact outcome depends on the type of aid, the timing of your leave, and your school’s policies. This article explains what happens to your financial aid leave of absence, so you can plan ahead and avoid surprises.
How a Leave of Absence Affects Your Current Financial Aid
When you take a leave of absence, your school must determine whether you are still enrolled at least half-time. If you drop below half-time enrollment, your financial aid for that term may be reduced or canceled. Federal student loans and grants are typically awarded based on your enrollment status, so a change in status can trigger adjustments.
If you receive a leave of absence and do not attend classes for more than 60 days, your school may treat it as a withdrawal. This means the school must return any unearned federal aid to the government. You may also be required to repay a portion of the aid you already received, depending on how much of the term you completed.
What Happens to Your Federal Loans During a Leave of Absence
Federal student loans generally enter repayment after you drop below half-time enrollment. However, if you take a leave of absence that is approved by your school and you plan to return, your loans may remain in deferment. You must contact your loan servicer to request a deferment or forbearance to avoid missing payments.
If you do not make arrangements, your loans may enter repayment, and missed payments could lead to delinquency or default. Defaulting on a federal loan has serious consequences, including damage to your credit score and loss of eligibility for future aid.
Return of Title IV Funds: The Key Rule
When you withdraw from all classes or take a leave of absence that is treated as a withdrawal, your school must calculate the amount of federal aid you earned. This calculation is called the Return of Title IV Funds (R2T4) process. The school determines the percentage of the term you completed, and that percentage determines how much aid you can keep.
For example, if you complete 30% of the term, you are eligible to keep 30% of your federal aid. The remaining 70% must be returned to the government. The school returns its share, and you may be responsible for returning your share. The table below shows how the percentage of the term completed affects your aid.
| Percentage of Term Completed | Percentage of Aid Earned | Possible Repayment |
|---|---|---|
| 10% | 10% | Repay 90% of aid |
| 30% | 30% | Repay 70% of aid |
| 50% | 50% | Repay 50% of aid |
| 60% or more | 100% | No repayment |
If you complete more than 60% of the term, you are considered to have earned all of your aid, and no repayment is required. However, you may still be responsible for returning any funds that were paid directly to you for living expenses.
How to Protect Your Financial Aid During a Leave of Absence
Before you take a leave of absence, talk to your financial aid office. They can explain your school’s specific policy and help you understand the impact on your aid. Here are some steps to consider:
- Notify your financial aid office as soon as you decide to take a leave of absence.
- Ask whether your leave is considered an approved leave of absence or a withdrawal.
- Check if you have to complete a leave of absence form or submit documentation.
- Contact your loan servicer to discuss deferment or forbearance options.
- Keep records of all communications and forms related to your leave.
What About Scholarships and Grants?
Scholarships and grants from private sources may have their own rules regarding leaves of absence. Some may require you to return funds if you do not complete the term. Others may allow you to pause your award and resume when you return. Always read the terms of your scholarship or grant agreement and contact the provider for guidance.
Federal Pell Grants and SEOG grants are subject to the Return of Title IV Funds rules. If you withdraw, you may owe a portion of the grant back. The school will send you a notice explaining the amount you must repay.
Returning from a Leave of Absence: Reinstating Your Aid
When you return to school, you may need to reapply for financial aid. You must complete the Free Application for Federal Student Aid (FAFSA) for the new academic year. Your aid eligibility will be recalculated based on your enrollment status and financial need.
If you have a satisfactory academic progress (SAP) requirement, make sure you meet it. Taking a leave of absence may affect your SAP status, so check with your school’s financial aid office to see if you need to appeal or provide additional documentation.
Important Deadlines and Timeframes
When you take a leave of absence, there are important deadlines to keep in mind. Your school must return unearned funds within 45 days of determining that you withdrew. You have 30 days to repay any outstanding balance to your loan servicer. If you fail to repay, your loans may go into default.
For federal grants, you have 45 days to repay the amount owed. If you do not repay, you may lose eligibility for future federal aid. Always respond to notices from your school or loan servicer promptly to avoid negative consequences.
Practical Summary
Taking a leave of absence can affect your financial aid in several ways, including possible repayment of federal aid. The key is to communicate with your financial aid office and loan servicer before you leave. Understand your school’s policy, know the Return of Title IV Funds rules, and plan for repayment if necessary. By staying informed, you can manage your financial aid leave of absence and protect your future eligibility.
Frequently Asked Questions
Will I have to repay my financial aid if I take a leave of absence?
Yes, if you withdraw before completing more than 60% of the term, you may have to repay a portion of your federal aid.
Can I keep my student loans in deferment during a leave of absence?
Yes, you can request a deferment from your loan servicer if you are taking an approved leave of absence and plan to return.
Do I need to reapply for financial aid when I return from a leave of absence?
Yes, you must submit a new FAFSA for the academic year you return, and your aid will be recalculated.
What happens to my scholarships if I take a leave of absence?
Scholarships may have specific rules, so check with the scholarship provider; some may allow you to pause the award, while others may require repayment.
How long do I have to repay financial aid after a leave of absence?
For federal grants, you typically have 45 days to repay, and for loans, you must contact your servicer to arrange repayment within 30 days.
