University Student Loans Are Sometimes An Option

University Student Loans Are Sometimes An Option

University student loans are institutional loan programs that are available at some schools.

These loans are typically financed by alumni gifts to the school and money is repaid directly into these funds.

One great thing about these loans, is that student loans consolidation is available (unlike consolidating private loans from banks, right now).

Loans come in all shapes and sizes. Their terms are set by the college itself, so no federal guidelines need to be met.

The college literature that is mailed to you before you enroll will usually not mention university loans. You need to either call the school's financial aid office or search the school's website to find out what is available.

Each school that offers this type of program has its own criteria for entry. Some of the ways that colleges determine who is eligible are:

1. Financial need
2. Creditworthiness
3. Academic qualifications


University loans may be long term loans or short term loans. Some schools, like the University of Florida , offer both types.


Amounts can vary widely, depending on the type of loan and how much money is available in the program. For instance, Idaho State University has a maximum amount of $500 for their program, while Yale's maximum is $4,400 per year.

Generally when a graduating student has a combination of loans that includes a university loan, the school prioritizes payments, so that federal obligations are paid first. This means that the school assumes a higher level of risk when it makes an institutional loan.

When is a University Loan Not Really A University Loan?
The answer is: When a college simply labels any loan serviced by their financial aid office as a "university student loan". Check into the details of what each school you're interested in actually offers. If a university loan is listed as offered, it could be just a federal loan distributed by the college.

Also, some schools will not loan students money from these accounts unless they have been preapproved for the funds in their award letter. (Northwestern, for one) So if it is not mentioned there, you cannot apply later.

Student University Loans- Better or Worse than Private Loans?
It depends. If you can't afford to pay it off while you are in school, then do not take a short term university loan. Go for a private loan that can be deferred until after graduation.

If you are looking for a kind of bridge loan to meet expenses until some other funds kick in for you, then a short term university loan is probably right. Most of these are available at a low interest rate.( 1% for University of Florida) Some colleges will take advantage of your temporary shortage, (Ohio State at 7%!) but its still better than many private interest rates.

Long term rates vary from school to school:

* Some want a cosigner. (Vanderbilt, for example)- Others emphasize that they are student loans- no cosigner needed (and they will not give any loan info out to parents)

* Some offer fixed rates. (ranging from the University of Rhode Island's 5% to Brown's 9%)- others offer variable rates from around 3%-10%

* Most loans need to be repaid in ten years. (The shortest period I found was seven years for the University of Missouri.)

* Most loans have a six-month grace period. Some do not have any (University of Florida) and some give you nine months- Penn State University .


A new twist on university student loans is now offered by the UC Davis School of Law. Annual interest-free loans are given to graduates who take jobs with nonprofit or government agencies and make less than $60,000 per year. The loans must be used to pay off student loans and each one will be forgiven at the end of the year. These loans may be taken out for ten years (long enough to clear student loan debt).


The point is, what's right for your situation? It may be easier for you to get approved for a loan from the school you attend, than from a bank or a loan company.

The fixed rate offered by university student loans may be an attractive feature for you, because you will know what to expect to pay. Just remember that student university loans cannot be consolidated with your federal loans.