Institutional loans for universities
Institutional loans for the students private lenders turn away. Grad PLUS is gone. Parent PLUS is capped. Direct loans are prorated. Billions in unfunded need with nowhere to go. And your university is paying for it.
Enter Clasp Student Finance: a turnkey institutional loan program, with one vendor for the full life of the loan, where every dollar repaid goes to your university.
Hover or tap the highlighted phrases for the numbers.
- Estimated federal funding gap from PLUS changes, AY 26–27 and beyond
- $12.9B
- Remaining gap after private lenders and payment plans absorb what they can
- $6.9B
- Of undergraduate private student loans require a cosigner1
- 96.5%
- From signed MSA to a live program, with no new institutional headcount
- 8 weeks
01 · The funding gap
The gap always existed. OBBB made it far bigger.
By eliminating Grad PLUS, capping Parent PLUS, and prorating part-time students using Direct Loans, OBBB removed billions in annual available lending capacity. Private lenders and payment plans will absorb part of it. They will not absorb all of it.
Where the PLUS funding gap goes
- $5.2BAbsorbed by private lenders (assumed 40%)
- $0.8BAbsorbed by university payment plans (assumed 5.8%)
- $6.9BUnfilled: no product is built for it
Clasp analysis of PLUS program changes under OBBB, AY 2026–27 and beyond. Assumes 40% of the gap is covered by private lenders and all programs where students have gaps under $5,000 are covered by payment plans. Excludes the additional effect of proration and related OBBB changes.
Want your institution’s share of the gap?
Size my gap02 · Why private loans can’t close it
Private lending is not a bad product. By design, it serves the students who least need help.
96.5%
of undergraduate private student loans are cosigned
73.1%
of graduate private student loans are cosigned
Eye-watering rates
for the borrowers who do qualify
And it isn’t only students who pay. Those rates make college feel more expensive, set students up for financial stress, and lower the number of students who take the loan at all, which raises the risk they leave school before finishing their degree.
A cosigner requirement is not a neutral filter.
It disproportionately impacts the students most in need of a degree to achieve economic mobility.
Serve the students private lenders decline.
Request information03 · The institutional decision
Without an institutional option, the student doesn’t enroll, doesn’t persist, doesn’t graduate. And the university eats it.
When a student has a gap and can’t get a private loan, the institution has three options. Only one protects both the student and the balance sheet.
| Measure | No supportThe student leaves before finishing | Plug the gap with a grantThe “phantom grant” | Institutional loan through the Clasp platformA compliant, last-dollar program |
|---|---|---|---|
| Net revenue to the institution | $0. The seat and the revenue both walk out the door. | Federal Direct Loan revenue only, nothing above it. | Direct Loan revenue plus what is recovered on the loan. |
| Tuition discount rate | No discount taken, but on zero enrolled revenue. | Discount rate climbs; net tuition per student falls further. | No discounting impact. Revenue stays whole. |
| Retention, graduation rate, CDR risk | Graduation rate falls; roughly 59% of non-finishers default. | The student is retained. | The student is retained. |
| Student outcome | Debt and no degree: the worst outcome on every axis. | Enrolled and funded. | Enrolled and funded. |
Institutions already absorb the cost of this gap. The question is whether they absorb it as discount rate, as lost enrollment, or as a managed receivable.
See what a program would recover for your university.
Model my program04 · Last-dollar by design
We come last. On purpose.
Loans made available through Clasp’s platform are intended as a last-dollar funding option for your students. Clasp never seeks to upend the traditional financial aid hierarchy. Instead, we defer to your financial aid team and respect that students should follow this order:
- FirstGrants and savingsTake advantage of every option that reduces the need to borrow in the first place.
- ThenFederal loansTake advantage of income-based deferral, forgiveness and federal borrower protections.
- ThenPrivate loans, where availableTo the extent the student is eligible, which almost always means a creditworthy cosigner.
- Only thenInstitutional loansThese may take the form of loans made available through the Clasp platform, or payment plans.
04 · Why one partner
One vendor for the entire program.
You should spend your time educating students and preparing them for classroom and career success, not building loan programs. With Clasp, you can do exactly that.
With Clasp, your university doesn’t need to:
- Hire and grow in-house credit, technology and financial regulatory compliance talent
- Build a technology platform
- Get lending licenses
Experience and expertise
A team drawn from consumer and student lending, credit, originations, servicing, collections, banking and capital markets, and financial regulation, with programs live today at degree and non-degree institutions.
Tailor-made for your students
Terms, credit box, eligibility and repayment structure designed around your institution’s programs and population. Not a fixed product you are asked to adopt.
Lending built for exactly this gap
These bank loans exist for students whose shortfall comes from not having a creditworthy cosigner: the population frequently declined for private loans, and specifically supported by these programs.
Compliance specific to institutional lending
A bank issues all loans. All servicing is performed by licensed third-party student loan servicers. Compliance is overseen by Clasp in-house.
How the alternatives are structured
| Question | A private lender’s university program | Payment plan or installment contract software | Clasp |
|---|---|---|---|
| Who owns the receivable | The lender. | Your institution. | Your institution, and 100% of every dollar repaid. |
| Who carries lending and licensing risk | The lender, but they set the credit box, so the students they decline are still your problem. | Your institution. Installment contract structures leave you exposed to state-specific licensing and enforcement. | A chartered bank is the lender of record. |
| Which students it reaches | Credit-approved borrowers, disproportionately those with a creditworthy cosigner. A large share of applicants are declined. | Small-dollar shortfalls, typically a few thousand dollars or less. | Designed for the students other products decline, including those without a cosigner. |
| How much of the program is covered | Origination and capital. Program design is theirs, not yours. | Origination and servicing software. | Program and credit design, origination, servicing, collections, compliance and analytics. |
One partner to support your students with unfilled funding gaps.
Request information05 · What your institution does
Four simple steps to launch your program.
One partner manages a team of service providers that helps bring the end-to-end student experience to life, without additional staffing or lift from your team.
- 01
Sign off on the program design
Terms, credit box and eligibility, built around your programs and your students. We design it with you; you approve it.
- 02
Sign an MSA with Clasp
Services, timelines and fees in one agreement. Clasp’s counsel works directly with yours.
- 03
Certify loans
Confirm enrollment and adjust amounts, exactly as your financial aid office already does for every other loan type.
- 04
Decide where repayments should go
Give the bank an account for student repayments.
- No SIS integration
- No student PII passed to Clasp
- No new headcount
- No collections team
- No lending licenses
06 · Program design
Built the way your institution needs it.
Clasp supports two types of institutional loan structures. Your mission, student population and balance sheet should decide the structure, not a vendor’s technology.
Fixed-rate installment
A conventional amortizing loan at a fixed rate, with in-school deferral or a small touch payment during enrollment. The default choice for most institutional programs, and the most predictable for your own modeling.
Income-based
Repayment that flexes with what a borrower actually earns, with a minimum income protection floor. Suited to programs where earnings vary widely, or where affordability is what limits enrollment.
Fixed-rate with income-based deferral
Fixed interest, with capped deferral so payments pause or reduce when income falls below a threshold.
Income share
Repayment expressed as a share of income over a defined term, with caps.
Who we work with
Our work is concentrated in colleges and universities: graduate, professional and undergraduate programs where federal caps now leave real gaps. We also continue to serve career training institutions, trade schools and non-degree providers.
- Loans originated by a chartered, FDIC-member bank partner
- Servicing performed by a licensed third-party student loan servicer, under Clasp oversight
- Programs designed for compliance with federal and state lending regulation
Bring us your enrollment and/or federal borrowing data. We’ll bring you a program.
Request informationQuestions for your board
What CFOs ask us first.
Are we becoming a lender? Do we need licenses?
No. A chartered bank, Member FDIC issues the loans and acts as the lender of record. All servicing is performed by licensed third-party student loan servicers, and compliance is overseen by Clasp in-house. With Clasp, your university doesn’t need to get lending licenses.
When do we get paid?
As student borrowers repay their loans. Every dollar a student repays goes to the institution: you give the bank an account for student repayments, and your institution receives 100% of every dollar repaid. Clasp is paid by the university, invoiced separately, and never takes a cut of borrower payments.
What happens when students default? Do we have to chase them?
The university has no operational role. Clasp (through its third-party student loan servicer and collections agencies) manages servicing, deferral and hardship options, delinquency, settlement, charge-off and third-party collections, to maximize your recoveries while remaining student-centric.
What are the loan terms?
This varies by university depending on your goals. Clasp will help you design a program that remains affordable and accessible for students, and sustainable for your institution.
How is Clasp paid, and what is its incentive?
By the university, invoiced separately from any loan repayments collected from student borrowers.
Does this replace our private lender partners?
No. Institutional loans through Clasp’s platform are complementary to private lenders. These programs are built for the students that lenders decline, usually because they lack a creditworthy cosigner, and it sits after private loans in the funding waterfall.
Could loans be viewed as predatory?
We do not think so. Loan programs made available by the bank through the Clasp platform generally offer lower interest rates than students without a creditworthy cosigner would otherwise receive from private lenders. As a result, universities generally lose money on these loan portfolios. Further, all programs are underwritten for ability to pay, and are certified by the university, to avoid overborrowing.
How long does it take to launch?
Programs have gone live within eight weeks of signing the MSA. We size your gap and recommend a design, execute the agreement, build the portal and materials and train your aid office, then launch.
Have a question your board will ask?
Ask our teamPolicy and research
We understand the policy that created the gap.
Clasp Student Finance is led by a team that works on federal student loan policy directly, including a seat at the table in the 2025/2026 negotiated rulemaking. Our policy work is how we design programs that hold up.
David Kafafian, President of Clasp Student Finance, served as a negotiated rulemaker on the U.S. Department of Education’s 2025/2026 AHEAD negotiated rulemaking: one of the negotiators at the table as the rules governing federal student lending were written.
Policy briefs
Tools
Size your own gap before you talk to anyone.
Grad PLUS Gap Estimator
What is your institution’s gap? Sized by program and enrollment.
Request accessRAP & Private Loan Cost Comparison
What repayment under RAP and a private loan actually costs your students, next to an institutional program.
Request accessNet Economics Model
Program economics under different loan terms: recovery, net tuition retained and portfolio behavior over time.
Request accessAlso available publicly: the RAP vs. SAVE Repayment Calculator for students comparing federal repayment plans.
Request information
Start with your numbers, not a sales call.
Tell us your institution and program mix. We’ll come back with a sized gap estimate and an illustrative program design, before you commit to anything.
For CFOs, VPs of Enrollment, Presidents and Directors of Financial Aid.