How your grades could affect your student loans

Could getting good grades save me money on student loans?

Usually, no. Federal student loans don’t have financial perks for getting good grades. Neither do most private lenders.

But there are exceptions. For example, Discover offers a 1% cash reward on your loan amount if you average a 3.0 GPA or higher during your loan term. To receive your reward, you must submit a redemption form within six months after your academic term the loan covered is over. Discover will then send you a check in the mail.

While grade-based rewards aren’t common now, it’s something to look out for in the future if you decide to go back to school. It’s possible other lenders will start offering similar features.

What happens if I get low grades?

Bad grades could cause you to lose your eligibility for federal aid. This means that not only are your federal loans at risk, but you could also lose your grants and eligibility for work study.

The Federal Student Aid office of the Department of Education requires that you have satisfactory academic progress to remain eligible for federal aid. While it’s up to your school to decide what satisfactory academic progress means, you generally must:

• Maintain at least a C average or 2.0 GPA
• Pass enough credits to be on track to graduate (usually at least 12 credits a semester)

You can find your school’s requirements for satisfactory academic progress either on its website or by reaching out to its financial aid office.

7 ways you could lose eligibility for student loans

Could getting bad grades affect my private student loans?

Generally, no. Even Discover’s rewards program for good grades doesn’t penalize you for getting bad grades.

With that said, failing a course at the wrong time could affect both your federal and private student loan payments. If you fail a course during the last semester of your senior year and need to make it up the next semester, you’ll drop below half-time enrollment.

Most repayment plans that come with a deferment option that starts as soon as you drop below half time or six months after. Either way, you’ll have less time than you might have counted on after graduation.

Grades and financial aid

Getting good grades might not help that much with loans — your grades just need to stay satisfactory. The same is true for many other types of financial aid. Most schools require at least a 2.0 GPA to be eligible for need-based aid or athletic scholarships.

You’ll need to score a bit higher to keep a merit-based scholarship, however. Most require students to earn at least a 3.0 to 3.5 GPA to qualify for or renew a scholarship or grant.

6 more ways your financial aid can get suspended

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5 tips to keep your grades up

1. Don’t overload your courses. Be realistic about how much work you can handle. Maybe those six classes all sound really interesting now, but they won’t when you’re cramming to write six term papers in a week.
2. Pace yourself. Divide up parts of your projects into manageable portions so you can spend the time you need on each task — and avoid stressing out at the end of the semester.
3. Don’t skip classes. Attendance can count for as much as 50% of your final grade in some classes. Don’t miss one without having a legitimate reason. And if you need to skip, let your professor know ahead of time.
4. Don’t skimp on notes. Taking notes on your lectures and readings can work as a handy reference when you’re studying — it helps retain information better by reinforcing what you’re learning.
5. Join a study group. Sometimes having a time, place and social obligation can make all the difference with studying. Study groups are extra helpful if you’re taking a foreign language class or have an oral presentation. Plus, there’s nothing like the fear of your peers to motivate you into doing well on an exam.

Bottom line

Good grades can help you keep your student loans more than they can help you save. In fact, you need to keep a 2.0 GPA to stay eligible for any type of financial aid. While Discover offers a cash reward for keeping your GPA above 3.0, it’s the exception, rather than the rule. At least for now.

You can find out more about how student loans work and find providers to help pay for school or refinance your loansby checking out our guide.

Frequently asked questions

• Can I regain my eligibility for federal aid after my grades slip?

  You can if you can convince your professors or university to reconsider your grades. There are also some loopholes you might be able to exploit — like changing majors or degree programs — that can make you eligible for aid again. Talk to your school’s financial aid office to learn more about your options.

• Can I get financial aid if I'm on academic probation?

  When it comes to federal aid, it depends on your school’s standards for probation. If you still meet the requirements for satisfactory academic progress, then you should be able to keep getting financial aid. If not, then you won’t — at least not from the government.

  That doesn’t mean you’ll have to pay for school out of pocket — you can still apply for private student loans.

• Can I be disqualified for federal aid if I drop a class?

  It depends on how many credits you’re taking. Generally, as long as you’re still earning at least 12 credits you should remain eligible for federal aid. However, this can vary by school or program. Check with your financial aid office if you’re concerned you’ll lose your funding.