Do You Have to Pay Back Scholarships if You Drop Out of College?

By Gabriel Jimenez-Ekman

Gabriel Jimenez-Ekman is a content editor and writer at Scholarships360. He has managed communications and written content for a diverse array of organizations, including a farmer’s market, a concert venue, a student farm, an environmental NGO, and a PR agency. Gabriel graduated from Kenyon College with a degree in sociology. Full Bio

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Annie has spent the past 18+ years educating students about college admissions opportunities and coaching them through building a financial aid package. She has worked in college access and college admissions for the Tennessee Higher Education Commission/Tennessee Student Assistance Corporation, Middle Tennessee State University, and Austin Peay State University. Full Bio

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Annie Trout

Posted: June 22nd, 2022

Dropping out of college can be a tough decision for many reasons. It’s important to inform yourself about all the possible outcomes before you make any final choice. That’s why every student should answer one important question before deciding to drop out: “Do you have to pay back scholarships if you drop out of college?”

In this article, we’ll go over the possible scenarios that may require you or not require you to pay back your scholarships upon dropping out. Remember – this guide is a general set of rules that applies to many situations, but individual scholarship terms can vary. So, always be sure to contact your scholarship provider to find out definite answers for your situation.

Also see: How does withdrawing from a class affect my financial aid?

Scholarships vs. loans

In general, students do not have to pay back scholarships. If a student receives a scholarship and completes the schooling for which the student was awarded the scholarship, they will have nothing to repay. On the other hand, students who take out loans will have to repay those loans, plus interest, after graduating. 

Dropping out mid-semester vs. between semesters

Dropping out mid-semester

So, what can cause you to have to repay scholarships? Well, the most common culprit is dropping out of school mid-semester. If you have received money to complete a semester, but did not complete it, you may have to pay for the remaining funds out-of-pocket. Keep in mind that this is not a hard-and-fast rule, and can vary based on your scholarship provider, the amount of the semester you completed, your reasons for dropping out, and your school’s policies.

To ensure that you are making a financially conscious decision, reach out to your school’s financial aid office and your scholarship provider before making any mid-semester enrollment changes

Dropping out between semesters

If you drop out of school between semesters, you are in a much better place in terms of repaying scholarships. Typically, you will not have to repay anything. Of course, you won’t receive the future disbursements of the scholarship that you would have received if you continued attending school. But even so, you won’t face further financial penalties. 

If you plan on going back to school and only want to take a break, make sure to check in with your scholarship provider to see if you can retain your scholarship benefits when you return to class. Depending on the terms of the scholarship and your reasons for taking a break, your provider may be willing to work with you on a schedule for returning to school and utilizing the rest of your scholarship funds.

Don’t miss: Do you have to pay back Pell Grants if you drop out of college?

How can I avoid repaying my scholarship if I drop out?

If you drop out of your school, your best bet for not owing any money to your scholarship provider is to finish out your semester and drop out at the end of it. Even if outstanding circumstances make it difficult to devote the necessary effort to your schoolwork, you can take a few measures to help lighten the load. 

These include taking courses Pass/Fail, meaning that a low grade won’t negatively impact your GPA so long as you don’t fail. You can also be sure to speak with your professors candidly about whatever is holding you back from doing your best. That way you can work on a way to keep you on track during the semester while still fulfilling other obligations.

Also see: Scholarships360’s free scholarship search tool

Changing from full-time to half-time

Dropping out isn’t the only thing that can cause you to have to repay scholarships. If you change your enrollment status from full-time to half-time, your scholarship eligibility may change. If you change this status mid-semester, that could result in you having to repay part of the aid that has already been paid to you. 

So, try to make any of these adjustments before the semester starts rather than after, and keep in touch with your scholarship provider and financial aid office so that you can understand the impacts of any change before you make it.

Also see: Do I have to start paying back student loans if I take a semester off?

Weighing the decision to drop out of college

Dropping out of college is a big decision; for many, it is unavoidable. Whether the college isn’t a good fit or whether external circumstances are demanding the student’s attention elsewhere, thousands drop out of school each year. 

When approaching this decision, it’s important to know all of the logistics to take care of, as well as get an idea of what your options are moving forward. Our guide regarding dropping out of college will help you land on your feet and ensure that you know your education options moving forward.

Key Takeaways

• Each scholarship and school has its own terms, so some might require that students pay them back if they drop out, whereas others may not
• Always make sure that you are aware of the financial consequences before you make any final decision about dropping out or dropping to half-time enrollment
• You may be better off staying at school through the end of the semester and pass/failing your courses in order to prevent having to pay back your scholarships