Can a Tuition Loan Help You Pay for College?

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

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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

These 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 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 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.

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Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

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