School-Channel Loans

School-channel loans are one of the two typical private student loans. School-channel loans, unlike their direct-to-consumer counterparts, are always processed through the student's college or university but can offer lower interest rates.

Issuing funds

Unlike other private student loans, school-channel loans are issued to the school rather than the student. The school must approve the amount issued, so they are typically limited by the student's specific cost of attendance. While this policy may vary somewhat, a student using a school-channel loan usually cannot borrow more than his or her cost of attendance, less any other financial aid the student receives.

Interest rates

Because of the educational institution approval policy, school-channel loans usually offer a much lower interest rate than other private student loans. This is a great benefit to those concerned about their student loan debt.

Processing time

The draw back to the approval policy is the processing time. It takes a little longer to process loan requests and issue funds to the student. This is usually not an issue if financial aid applications are submitted early, but if a student needs last minute funds, a different type of loan is the better option. Students who choose this type of loan must ensure that they get any necessary paperwork to their school before the financial aid priority deadlines.

School-channel loans are a great option for the student in need of financial aid. They offer a much better interest rate than other student loans without too many drawbacks, especially for those who apply early.