With the cost of college at a public four-year university nearing $10,000 per year for tuition and fees alone, students can use all the help they can get to cover this price tag.
In addition to more traditional student loans, tuition loans might also be an option for some students. Here’s a look at what a tuition loan is, and whether it could be a smart way to help you pay for college.
What are tuition loans?
If you’re wondering what exactly a tuition loan is, you have good reason to be confused — the term “tuition loan” can often refer to a few different things. It’s sometimes used interchangeably with “student loans,” or other educational debt. Tuition loans can also be a financing tool that parents can use to pay for tuition at a K-12 private school.
But some colleges do offer small loans directly to students that they also call “tuition loans.” These college tuition loans are typically a form of institutional aid and can be short-term loans that are repaid immediately, or long-term loans that resemble federal student loans.
How to get a tuition loan
Tuition loans aren’t a common offering at most schools, but some colleges or specific departments will offer them to provide an additional source of student aid and funding.
If you’re curious about this type of loan, you can check with your college’s financial aid office to see what forms of aid it offers.
If they do have a tuition loan, make sure to carefully review its terms and conditions, as these are set at the college’s discretion and can vary widely. You’ll also need to find out if you qualify for one of these college tuition loans, and if you do, how to apply.
Here are two examples of colleges that offer tuition loans:
The University of Texas at Austin (UT) lends funds directly to students through two types of student loans: a cash loan and a tuition loan. The cash loan is a type of emergency student loan, allowing a student in a tight spot to borrow up to $500. Students can also apply for a tuition loan to cover larger school costs. Both of these UT student loans had an annual percentage rate (APR) of 4%, as of Nov. 6, 2018.
The University of Utah offers short-term book loans, as well as tuition loans. The book loan provides up to $450 per school year toward books and other class materials and equipment. The University of Utah also offers loans for tuition fees, up to the current outstanding charges on a student’s account.
Interested students can submit an application and pay a $15 processing fee. They will also need a good credit rating to qualify for these tuition loans and must be otherwise eligible for federal student aid.
Should you get a tuition loan?
Of course, you should always be cautious when borrowing money for college — and tuition loans are no exception. Here’s what you should consider before taking on college tuition loans.
Max out your gift aid first
If you can avoid or limit educational debt, that’s almost always the best move. Since you’ll need to check with your financial aid office to see if your college offers tuition loans, ask about other funding options as well.
See if you can get additional gift aid, such as grants and scholarships, since these won’t need to be repaid. The financial aid office is a great place to start seeking out gift aid, but you can also spend some time searching for college scholarships and grants on your own, too.
Ask about a payment plan
If you simply don’t have the funds to pay for college right now, but you will by the end of the semester, consider asking for an extension or a payment plan. If you just need a few more days or weeks to get the funds together to pay your tuition, ask for an extension and see if your financial aid office is willing to work with you.
Tuition payment plans are also a common solution offered to college students and their parents. These allow you to pay your tuition in installments over the course of the semester, rather than the whole amount upfront. Best of all, a payment plan is not a loan — you might pay a small fee to sign up for the payment method, but you won’t be charged interest.
Compare tuition loans to other student loans
If you still have costs you need to cover, it might be time to consider borrowing for college. If you do need to take out a loan for college, it’s wise to carefully compare your options. It’s important to compare tuition loan costs — such as interest rates and loan fees — to those for federal and private financing.
Here’s an overview of your student loan options beyond tuition loans:
|Federal Student Loan||Who can use it?||Interest rate (2018-19)||One-time loan fee||Interest is paid in deferment||Annual loan limit|
|Direct subsidized||Undergraduate students with a demonstrated financial need||5.05%||1.062%||Yes||Up to $5,500 per school year|
|Direct unsubsidized||Undergraduate students||5.05%||1.062%||No||Up to $7,500 per school year for dependent students
Up to $12,500 per school year for independent students
|PLUS||Graduate students and parents of undergraduate students||7.60%||4.248%||No||Cost of attendance, after all other student aid is applied|
|All information current as of Nov. 6, 2018. Source: Federal Student Aid|
It will be pretty straightforward to compare a tuition loan to federal student loan options listed above, since you know exactly what rate and fee you’ll face. But you might also want to check out private student loans, especially if you need to take out more than the borrowing limits on federal student loans or tuition loans.
If tuition loans are available to you, this form of student aid is worth considering. They’re often designed to provide help when and where it’s needed most. Do your research and understand the responsibility you’re assuming by taking on a tuition loan, so that you can be sure you’re making a wise decision about how to pay for college.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or Nationwide Bank, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 11/1/2018. Variable interest rates may increase after consummation.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.94% – 12.78%1||Undergraduate, Graduate, and Parents|
|4.06% – 13.06%3||Undergraduate and Graduate|
|4.34% – 12.99%2||Undergraduate and Graduate|
|4.37% – 11.23%*,4||Undergraduate and Graduate|
|5.03% – 11.23%5||Undergraduate and Graduate|
|4.12% – 13.13%6||Undergraduate and Graduate|
|5.62% – 10.01%7||Undergraduate and Graduate|
|3.93% – 9.81%8||Undergraduate, Graduate, and Parents|
|4.26% – 12.13%9||Undergraduate, Graduate, and Parents|