Institutional Student Loans

In addition to researching state and federal loan programs, such as the Stafford and PLUS loans, it’s also wise to check with your college or university, to see if they offer institutional loans.

Institutional loans are provided by educational institutions as a way to help bridge the gap left by state and federal funds, as these funds are sometimes short of covering the entire cost of a college education.

Long-term Institutional Loans

Each college, or institution, will have different types of loan programs. Below are some general guidelines that most colleges and universities will use for their long-term institutional loans (check with your institutions for more details):

Interest rate: The annual interest rate of a long-term institutional loan is usually between 3% and 10%. The interest rate will be stated on your promissory note.
Grace period: The grace period explains when you have to start making payments on your loan. The grace period usually starts when your enrollment falls below half-time. Grace periods for long-term institutional loans vary from three months to one year. And, some long-term institutional loans do not have a grace period. Be sure to check your promissory note so you’ll know when you have to start repaying your loan.
Loan repayment: Repayment of a long-term institutional loan begins when the grace period ends. During your exit interview, pertinent information and a repayment schedule are provided to you. The repayment schedule contains the number of payments, interest rate, date of the first payment and frequency of payments. Long-term institutional loan payments are generally due on the first day of each month. Monthly payment amount depends on the amount borrowed.

Check with your financial aid office to learn which long-term institutional loans are available to you.

Short-term Institutional Loans

Again, each college will have different short-term institutional loans. Here are some general guidelines that most colleges and universities follow with regard to their short-term institutional loans:

Interest rate: The monthly interest rate on a short-term loan is generally close to 1%. Check your promissory note for the exact interest rate.
Grace period: The grace period explains when you have to start making payments on your loan. The grace period usually starts when your enrollment falls below half-time. Generally, a short-term institutional loan does not have a grace period. But check your promissory note to make sure.
Loan repayment: Repayment for a short-term institutional loan is generally due on the first day of the last month in a semester. And, normally, you do not have an exit interview for a short-term institutional loan.

Check with your financial aid office to learn which short-term institutional loans are available to you.

Finding Institutional Loans

Your college’s financial aid office is the best place to start learning more about institutional loans. They will provide you with a list of the institution’s loan programs, as well as exact details on the process to obtain these loans.

It’s generally thought to be best to exhaust federal and state student assistance before pursuing institutional loans. However, when primary funds will not cover all of your expenses, institutional options can be a great alternative.

As with all loans, be very familiar with the terms of the agreement before signing any contracts or accepting a loan. You’ll want to know exactly what’s expected of you as far as the repayment period is concerned.