How your grades could affect your student loans
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How your grades could affect your student loans

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Good grades might not always help you save, but they can help you keep your financial aid.

You might have heard that your field of study or major could affect your private student loan rates and wondered: Do grades matter too?

If you’re receiving federal funds, your grades could make or break you. With private loans? You’re generally safe as long as you’re enrolled above half time. Read on to learn in more detail how your grades can and can’t affect your financial aid.

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    Could getting good grades save me money on student loans?

    Usually no. Federal student loans don’t come with financial perks for getting good grades and 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.

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    What happens if I get low grades?

    Bad grades could cause you to lose your eligibility for any 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 GPA to qualify for or renew their scholarship or grant. Some even go as high as 3.5.

    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 don’t go crazy 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. To stay on your professor’s good side, let them 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 — they’ll be in your own words. Beyond that, note taking helps you retain information better by reinforcing it with a physical activity, especially when you write by hand.
    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 by checking out our guide — and find providers to help pay for school or refinance your loans.

    Frequently asked questions

    Anna Serio

    Anna Serio is a staff writer untangling everything you need to know about personal loans, including student, car and business loans. She spent five years living in Beirut, where she was a news editor for The Daily Star and hung out with a lot of cats. She loves to eat, travel and save money.

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