More and more in recent years, students have been going back to school and discovering how difficult it is to finance their educations, despite the fact that the Department of Education spends billions of dollars annually on financial aid for postsecondary education students. Thankfully, there are different loan programs that can help make financing secondary education that much easier.

What is an institutional student loan?

An institutional student loan is a type of loan that features the institution as the actual lender, with the student borrowing directly from them.

The Federal Perkins loan is a perfect example of an institutional student loan. The money is doled out at the discretion of the college as a result of FAFSA. The money ‘revolves’ so to speak, so as you are paying back your Perkins student loan, you are allowing another student in the same crisis situation you may have once been in to be able to continue to attend the post-secondary institution of their choice.

Pros of Institutional Student Loans

• Many of these loans have very low interest rates– Since these loans are designed to help a student in a unique crisis, the main goal is not to make as much money as humanly possible from the interest.
• Many of these loans have deferment and grace periods before the actual repayment of a loan occurs. Again, these loans are flexible in the deferment, grace, and repayment periods. The money you repay to  your loan will help a student in the future who needed a low interest rate.
• No credit check required for the many institutional loans- Like the Federal Perkins loan, many institutional loans do not require a positive credit history in order to be eligible for this loan. This can be very helpful since many students do not have good enough credit history to be eligible for a low interest loan.

Cons of Institutional Student Loans

• Debt is Debt– The more money you take out in loans to help pay for college, the larger the monthly payments you will be making in order to repay your student loans. While these loans have relatively low interest rates, there should always be other options besides just loans in order to finance your continuing education.