Institutional Student Loans

Financing your college education takes a great deal of research because so many different programs exist.  Several different options exist for educational financial aid from federal to state aid.  There are federal loan programs, such as the Stafford and PLUS loan programs.  There are also state-specific loan programs that vary by state.  And, when federal and state funds are not enough to cover the cost of your education, check with your college or university for institutional loans.  These loans may be short-term or long-term and can help bridge the gap left by federal and state funds.

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 what 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 what short-term institutional loans are available to you.

Finding Institutional Loans

The best place to find and learn more about institutional loans is your college’s financial aid office.  They will have a list of loan programs specific to your university as well as guidelines for obtaining and paying each back.  Again, it’s always best to exhaust your federal student assistance first.  Often, federal funds will not be enough to cover all of your expenses.  If that is the case, institutional loans may provide a welcome solution to financing your college education.  As with all loans, be familiar with the terms so you’ll know what’s expected of you during the repayment period.