Okay, so you probably already know about federal and private student loans, right? Well, let us introduce you to another type of loan: the institutional loan. Like with any type of loan, institutional loans have their own little ins and outs that you need to know about. Before we go over them, though, let’s answer an important first question.
An institutional loan is a type of private student loan where the lender is a college or institution. These are only offered to students already enrolled in the school.
Institutional loans function a little differently than traditional private student loans. For example, there are no standardized interest rates or terms across institutional loans.
This means that the terms of each loan will vary a lot more than usual from school to school. This includes repayment terms, and financial, cosigner, and eligibility requirements. The differences in these terms can be impactful. For example, some schools may not have flexible repayment plans, or they may not have as many borrower protections. Talk with your school’s financial aid office to understand all the terms and conditions clearly. Those terms and conditions should be ones you agree to and can follow.
Yes. Like with any loan, lenders have to make money somehow. They do this by charging interest, which is the amount of money you pay for borrowing the loan. When it comes to the interest rate, each school will set its own. Generally, though, long-term institutional loans can range anywhere from 3% to 10%. Short-term institutional loans will usually be close to around 1%. If you’re particularly lucky, you may go to a school that offers a 0% interest rate.
The answer to this question is completely up to you. As always, you want to look at other forms of aid first. Start with free aid like scholarships and grants. Then, look at federal loans. While you do have to pay back federal loans, they often come with a lot of benefits and flexible plans. After that, you can start looking for private loans like institutional loans. These should only be considered after you’ve accepted other forms of aid.
When taking out loans, you can typically borrow up to your school’s cost of attendance minus any financial aid you’ve already received. Try to limit what you borrow to what you think you can reasonably pay back.
To be considered for an institutional loan, you’ll need to have filled out the FAFSA. Also, remember that you can only get these types of loans at the school you’re enrolled in. Go through the enrollment process if you haven’t otherwise and you know what school you’re going to already. Finally, talk to your school’s financial aid office. They’ll inform you on things like documents you need, any requirements you have to meet, and the terms of the loan.
If you want to skip pre-qualification and apply directly with a lender, you can do so by clicking Apply below.
As with any student loan, institutional loans can be a great help. But, they’re not the only type of private student loans. Always compare several student loan options prior to accepting any one offer. Other private lenders may have great loans to offer you that match what you need.
And, you don’t have to scour the internet to find them. When you’re ready to compare private student loan offers, fill out Sparrow’s form to get matched with lenders. Then, save the ones you’re interested in and compare them before making a decision. It’s that easy.
